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Elevated freight and supply chain expenses have also crimped profits for the maker of Transformers toys and NERF blasters even though it took steps to cut costs by laying off 15% of its workforce.
Toy demand has typically remained resistant to economic uncertainties, but it fell sharply in the holiday season, with Hasbro (NASDAQ:HAS) rival Mattel Inc (NASDAQ:MAT) earlier this month projecting 2023 profit below expectations.
Retailers have cut back on orders to keep a tight lid on stocks following an inventory glut last year, squeezing revenues at toymakers. For Hasbro, Walmart (NYSE:WMT) accounted for around 13% of sales, while Target (NYSE:TGT) made up for roughly 8% of sales in 2021.
Chief Executive Chris Cocks said Hasbro is facing a “challenging consumer discretionary environment”.
The toymaker said it will take a nearly $300 million hit to 2023 revenue from the licenses and brands that it exited. It lost the highly-lucrative license to make Disney Princess toys to Mattel last year.
Hasbro said it expects 2023 adjusted earnings in the range of $4.45 to $4.55 per share, well below analysts’ average estimate of $4.88 per share, according to Refinitiv data.
Known for brands including Peppa Pig and My Little Pony, Hasbro also forecast its annual revenue to be down in the low-single digit percentage range, while analysts expected a 2.5% increase to $6 billion.
For the fourth quarter, the Monopoly board game maker posted revenue of $1.68 billion, in line with analysts’ estimates, after it reported preliminary results late in January.
Shares of Hasbro fell 1.5% to $57.50 in premarket trading.
