Hasbro Releases First Quarter 2018 Financial Results
Hasbro reported financial results for the first quarter 2018.
In a release on April 23, the Company provided the following financial highlights:
Net revenues for the first quarter 2018 decreased 16 percent to $716.3 million versus $849.7 million in 2017. The decrease in revenues is the result of the liquidation of Toys"R"Us in the U.S. and U.K., along with uncertainty in its other operations, as well as retail inventory overhang, primarily in Europe.
Net loss for the first quarter 2018 was $112.5 million, or $0.90 per diluted share, compared to net earnings of $68.6 million, or $0.54 per diluted share, in 2017. Excluding the Non-GAAP Adjustments noted above, adjusted net earnings for the quarter were $12.4 million or $0.10 per diluted share. The first quarter 2018 was a 13-week period versus the first quarter 2017 which was a 14-week period.
"The Hasbro teams executed extremely well during a challenging first quarter," said Brian Goldner, Hasbro's chairman and chief executive officer. "Hasbro brands are resonating with consumers and consumer takeaway is positive. However, as we discussed earlier in the year, our first quarter was expected to be difficult. We are working to put the near-term disruption from Toys"R"Us behind us. Our global retailers view this as an opportunity in a key consumer category and are partnering with Hasbro to develop growth plans for our brands. New Hasbro initiatives shipping in this quarter and beyond won't be caught up in the Toys"R"Us liquidation process. With the rapid shift to a converged retail environment, we accelerated plans we originally had spread throughout the year to transform our commercial organization on a more immediate basis."
"Our underlying financial strength is sound, and despite the near-term challenges associated with a major customer liquidation, Hasbro is positioned to manage a challenging 2018 and drive growth in 2019 and beyond," said Deborah Thomas, Hasbro's chief financial officer. "The quarter's revenue and profits were negatively impacted by lower revenues and higher expenses associated with events that do not reflect the health of our underlying business. We remain on track to meet our goal of generating $600 to $700 million in operating cash flow this year while investing to build our brands, transform our organization and return cash to shareholders."
First Quarter 2018 Major Segment Performance
First quarter 2018 U.S. and Canada segment net revenues decreased 19 percent to $364.3 million compared to $451.6 million in 2017. The segment reported an operating loss of $23.4 million compared to an operating profit of $64.8 million in 2017. The segment's first quarter performance reflected the Toys"R"Us liquidation both in lower revenues and $52.3 million of pre-tax expenses, primarily bad debt.
First quarter 2018 International segment net revenues were $287.9 million compared to $345.3 million in 2017. Revenues in the segment were negatively impacted by efforts to clear excess inventory in Europe, as well as the Toys"R"Us U.K. liquidation and uncertainty in its other international operations. International segment revenues include a favorable $19.5 million impact of foreign exchange. On a regional basis, Europe net revenues decreased 28 percent, Latin America increased 2 percent and Asia Pacific increased 3 percent. Emerging markets net revenues decreased 5 percent in the quarter. The International segment reported an operating loss of $56.1 million compared to an operating profit of $0.5 million in 2017. The decline in operating profit reflects lower revenues and includes $11.2 million of pre-tax expense associated with Toys"R"Us.
Entertainment and Licensing segment net revenues increased 21 percent to $64.0 million compared to $52.7 million in 2017. Operating profit increased 23 percent to $13.9 million, or 21.7 percent of net revenues, compared to $11.3 million, or 21.5 percent of net revenues, in 2017. Revenue growth was driven by consumer products and digital gaming. During the quarter, the Company adopted ASC 606 Revenue from Contracts with Customers which favorably impacted the timing of revenue recognition in the quarter.
Additional pre-tax expense of $7.0 million associated with Toys"R"Us and $17.3 million from accelerating the commercial organization transformation are included in the Corporate and Eliminations segment.
First Quarter 2018 Brand Portfolio Performance
First quarter 2018 revenues were negatively impacted across all Brand Portfolio categories by the liquidation of Toys"R"Us in the U.S. and U.K., along with uncertainty in its other operations, as well as retail inventory overhang, primarily in Europe.
First quarter 2018 Franchise Brand revenues decreased 19 percent to $361.7 million. Growth in Monopoly was offset by declines in all other Franchise Brands in the quarter. Franchise Brand revenues grew in the Entertainment and Licensing segment and declined in the U.S. and Canada and International segments.
Partner Brand revenues declined 6 percent to $200.6 million. Revenue growth in MARVEL and BEYBLADE was more than offset by declines in other Partner Brands. Partner Brand revenues increased slightly in the U.S. and Canada segment, but declined in the International segment.
Hasbro Gaming revenue decreased 22 percent to $105.2 million. Revenue gains in DUNGEONS AND DRAGONS, JENGA and several new game launches were offset by declines in other properties. Hasbro's total gaming category was down 20 percent to $203.5 million. Hasbro Gaming revenues declined in all three major operating segments.
Emerging Brands revenue declined 6 percent to $48.8 million. Revenue increases from STRETCH ARMSTRONG and LITTLEST PET SHOP products were offset by declines in other Emerging Brands. Emerging Brands revenues grew in the Entertainment and Licensing segment and declined in the U.S. and Canada and International segments.
Dividend and Share Repurchase
The Company paid $70.8 million in cash dividends to shareholders during the first quarter 2018. The next quarterly cash dividend payment of $0.63 per common share is scheduled for May 15, to shareholders of record at the close of business on May 1.
During the first quarter, Hasbro repurchased 427.1 thousand shares of common stock at a total cost of $38.8 million and an average price of $90.81 per share. At quarter-end, $139.2 million remained available in the current share repurchase authorization.
During the first quarter, the Company recorded lower revenues in part due to the loss of revenues from Toys"R"Us in the U.S. and Europe, as a result of the related liquidations as well as uncertainty in the other Toys"R"Us operations. In association with this, the Company recorded after-tax expenses of $61.4 million, primarily bad debt.
Hasbro also recorded $15.7 million of after tax expense associated with accelerating its commercial organization transformation. Over the past several years, the Company has invested in developing an omni-channel retail presence, and in 2018 is bringing onboard new skill sets and talent to lead in today's converged retail environment. These actions were initially planned to occur over time, commencing later this year. Given the current retail environment the Company chose to accelerate its actions.
In 2017, the Company recognized a provisional net charge of $296.5 million from the U.S. Tax Cuts and Jobs Act. Additional changes and guidance issued since year end resulted in a first quarter 2018 charge of $47.8 million, or $0.38 per diluted share. This charge is related to an increase in the Company's repatriation tax liability and a reversal of tax benefits no longer permitted under the new guidance. The Company expects its full-year underlying tax rate to be at the high end of its previously projected range of 15 percent to 17 percent.
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THE DAILY VIEW
Gilt and Sarah Jessica Parker Unveil SJP by Sarah Jessica Parker Bridal Collection for Spring
Sarah Jessica Parker, in partnership with Gilt, kicked off the exclusive launch of SJP by Sarah Jessica Parker Bridal, Gilt’s first foray into bridal ready-to-wear that would have Carrie Bradshaw swooning.
The collection includes dresses, skirts, bodysuits and other pieces, ranging in price from $295 to $2,395 and from sizes 0 to 14.
"Collaborating with Gilt on my first bridal ready-to-wear collection was an opportunity I couldn't pass up," said Sarah Jessica Parker. "The team there is brilliant and allowed me to be imaginative and take risks as I was designing for the non-traditional bride. It has been quite fun to play around with colors, fabrics and details to create unique pieces for all kinds of brides." The collection, comprised of ten styles, is inspired by Parker's vision of a modern, non-traditional bride, and is designed to dress a woman for a variety of wedding milestone moments; from her bridal shower through her wedding reception. Styles offered are a unique mix of classic dresses and gowns, modern bodysuits, full skirts, and a jumpsuit. The color palette includes traditional bridal white, sleek black, plus pops of blush, poppy, light gray and blue.
Designed in collaboration with Gilt, the collection was produced in New York City utilizing fabrics like cashmere and stretch crepe sourced from Spain, Italy and France.
The pieces all feature carefully curated details like elegant bows, sophisticated cutouts, feathers, intricate embroidery and beautiful hand-stitched beading.
The actress and style icon is no stranger to chic bridal wear. Carrie Badshaw, famously played by Parker, took part in an elaborate bridal photo shoot in Sex and the City: The Movie. The shoot featured gowns from designers like Christian Lacroix and Lanvin. Parker famously wore a black wedding gown for her own wedding to Matthew Broderick in 1997.
"Not only is Sarah Jessica Parker's style known around the world, her point of view is one-of-a-kind," says Tom Ott, Chief Merchant of Gilt. "Sarah Jessica brings her impeccable taste and fashion sensibility to life in this collection. We think our customers will be delighted with the offering which is stylish and well-priced in the bridal category."
As part of the bridal launch, Gilt will also offer 15 exclusive styles from the SJP by Sarah Jessica Parker footwear line, each of which are complementary to the bridal collection.
To correspond with the bridal collection launch, Gilt City will present offers from some of Sarah Jessica Parker's favorite places in New York City.
The offers were each chosen as a way to help brides plan for and celebrate the big day with highlights including, Leather Spa, Lars Nord Studio Tailoring, Mah-Ze-Dahr Bakery, among others.
Tea Forté Introduces ‘Matcha’ Collection
Convenience meets tradition in Tea Forté’s new Ceremonial Matcha Bowl Set and the Matcha Single Steeps.
The company said its spring harvested, shade grown, stone ground, organic matcha tea is best served in a centuries-old Japanese tea ceremony called chanoyu: a preparation technique known for its centering meditative qualities.
"The launch of Tea Forté's Matcha collection represents our continued commitment to wellness and cultivating all the potential mental and physical health benefits of tea," says Tea Forté CEO Michael Gebrael. "In addition to our high quality Pure Matcha, we've also blended four distinct flavored Matcha varieties. Prepackaged in pouches measured out for a single serving, our Single Steeps Matcha is ideal for the office, travel, or to keep with you for a boost anytime."
Tea Forté noted its handcrafted ceremonial tea bowl, handmade bamboo whisk and measuring ladle “encourages serene enjoyment of our premium Kosher, gluten-free and vegan matcha blends.” These include: Pure Matcha, Chocolate Matcha, Coconut Matcha, Ginger Matcha, and Chai Matcha.
According to a release, in addition to its distinctive taste, matcha is prized for its health benefits. Steeped green tea contains only the antioxidants that can be extracted in water, while with matcha, the whole leaf is consumed.
Available now in select stores and online at teaforte.com.
Expedia.com has released a year-end look at U.S. traveler behavior and trends for 2017, analyzing data to identify the most in-demand destinations, hotels, activities and more.
Among other insights, the roundup revealed:
- Labor Day was the busiest weekend for car rental
- Disney Theme Parks topped the list of things to do
- The average hotel stay was two nights
- Top destinations based on 2017 air travel included major global cities like New York, London and Bangkok
- Popular tourist destinations included Orlando, Cancun and Las Vegas