Hasbro has today cut its annual revenue forecast for the second time this year on weak toy demand and joined rival Mattel to warn of choppy Christmas-quarter sales, sending its shares down 12% before the bell.
The Monopoly maker expects 2023 revenue to tumble 13% to 15% compared to a prior forecast of a 3% to 6% decline.
Its third-quarter revenue and profit also missed market expectations, with revenue from its core toy business dropping 18% as shoppers cut back on non-essential spending.
"Although the impact of the broader toy category declines has changed our Consumer Products and total Hasbro outlook, we are growing share in the categories where we compete," CEO Chris Cocks said.
Hasbro saw a 40% surge in digital and licensed gaming revenue on strong demand for its "Monopoly Go" and "Baldur's Gate III" games.
Demand across the toy industry has weakened since a pandemic surge as consumers re-allocate their budget to cover for household essentials amid rising prices and higher borrowing costs.
"We are taking action to address the tougher macro environment across Toys and Entertainment and are positioning to return to profitable growth," Cocks said.
Analysts have warned that uncertain holiday spend and softer toy demand could prompt retailers to keep supply tight and offer steep discounts to avoid a pile-up like last year.
The maker of Transformers action figures expects its toy business to decline in mid- to high-teens for the year compared with mid-single digits decline it forecast earlier.
Hasbro said its net revenue fell to $1.50 billion, missing estimates of $1.64 billion, according to LSEG data. Excluding certain items, it earned $1.64 per share, below expectations of $1.70.
Mattel shares also sank 10% after warning of slowing demand ahead of the Christmas season, even as its third quarter benefited from the box-office success of "Barbie" movie.
