Hasbro (HAS) Shares Dip on Layoff Announcement & Industry Woes
Hasbro, Inc. HAS recently announced plans to lay off approximately 1,100 jobs (20% of its workforce) amid the ongoing challenges in the toy industry. Following the announcement, the company’s shares fell 5.5% during the after-hour trading session on Dec 11.
The news follows on the heels of an earlier cost-reduction strategy involving 800 job cuts in 2023. The company aims to potentially save up to $300 million annually by 2025.
Hasbro has been grappling with declining sales post-pandemic lockdowns. Global consumers are contending with elevated inflation, leading to cutbacks in non-essential spending in categories like toys, electronics, home goods and apparel.
Also, price-cut implementations to clear stock (owing to weak demand) are amplifying the company's challenges. Per the Circana data, toy sales in the United States (from January through August 2023) were down 8% year over year.
HAS’ CEO Chris Cocks acknowledges the ongoing challenging market conditions and foresees continued hurdles through the holiday season, potentially extending into 2024.
Dismal 2023 View
For fiscal 2023, the company expects revenues to decline 13-15% year over year compared with the prior expectation of 3-6% year over year. Segment wise, it envisions revenues in Consumer Products to decline year over year (at cc) between mid- to high-teens compared with the prior anticipation of mid-single digits. Hasbro still projects Entertainment revenues to plunge 25-30% year over year.
The adjusted operating margin for fiscal 2023 is expected to dip between 13.0-13.5% compared with 15.8% reported in the prior year. Also, adjusted EBITDA is expected to decline between $900 million and $950 million from $1,173.1 million reported in fiscal 2022. Operating cash flow is expected to be $500-$600 million, down from the prior expectation of $600-$700 million.
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Shares of the company have lost 22.2% in the past six months against the industry’s growth of 5.2%.
Zacks Rank and Stocks to Consider
Currently, Hasbro has a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the Zacks Consumer Discretionary sector include
Royal Caribbean Cruises Ltd. RCL sports a Zacks Rank #1 (Strong Buy). RCL has a trailing four-quarter earnings surprise of 28.3% on average. Shares of RCL have surged 115.9% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates a rise of 57.7% and 187.9%, respectively, from the year-ago period’s levels.
Live Nation Entertainment, Inc. LYV sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 37.5% on average. Shares of LYV have increased 17.4% in the past year.
The Zacks Consensus Estimate for LYV’s 2023 sales and EPS indicates a rise of 28.6% and 132.8%, respectively, from the year-ago period’s levels.
Cedar Fair, L.P. FUN carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 50.3% on average. Shares of FUN have declined 2.2% in the past year.
The Zacks Consensus Estimate for FUN’s 2024 sales and EPS indicates a rise of 3.8% and 25%, respectively, from the year-ago period’s levels.
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Hasbro, Inc. (HAS) : Free Stock Analysis Report
Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
Live Nation Entertainment, Inc. (LYV) : Free Stock Analysis Report
Cedar Fair, L.P. (FUN) : Free Stock Analysis Report
