(Reuters) - Hasbro Inc (HAS.O) expects to ramp up production in China to meet demand for its Nerf blasters, Transformers figures and other toys in the vital end-of-year holiday season, even as it warned of a hit to overall sales from coronavirus lockdowns.
The toymaker said on Wednesday sales of Monopoly and Play-Doh soared in March as Americans and Europeans locked in their homes, or preparing for lockdowns, turned to things other than mobile games and Netflix to keep themselves and their children occupied.
However, Hasbro warned of a hit to sales in the second quarter and scrapped its full-year forecast as the health crisis drives the world into recession, leading industry experts to predict a 20%-25% contraction in spending on toys this year.
That heightens the call for Hasbro and other big consumer goods producers to haul in strong sales over the end-of-year holiday season, and both the company’s results statement and its executives emphasized on a recovery late in the year.
“We expect to catch up on production over the coming months and be positioned to meet holiday demand,” the company’s finance chief Deborah Thomas told analysts on a call.
“We think it’s going to be a good holiday. We think that the holiday will still come.”
Shares in Hasbro, down by more than a quarter so far this year, lost another 3%.
While the United States and Europe have started to ease some of the coronavirus-led restrictions over the past week, most malls and “non-essential” streetfront shops in those regions remain shut, hammering business for retailers.
Hasbro’s manufacturing operations have also taken a hit, but the company said its supply chains have been fully restored in China, where it makes more than half of its products.
The suspension of movie production and delays in new releases are also hurting sales, with both it and rival Mattel Inc (MAT.O) reliant on licenses for “Avengers”, “Star Wars” and “Frozen” to pull in dollars.
Overall, the company swung to a loss of $69.6 million in the first quarter ended March 29, compared with a profit of $26.7 million a year earlier, due to costs related to its $4 billion purchase of Peppa Pig maker Entertainment One.
Net revenue rose 51% to $1.11 billion, boosted by the income from Entertainment One-distributed properties including the Oscar-winning film “1917”.
Excluding one-time items, the Pawtucket, Rhode Island-based company earned 57 cents per share, slightly below analysts’ average estimate of 58 cents, according to IBES data from Refinitiv.
Reporting by Uday Sampath in Bengaluru; Editing by Saumyadeb Chakrabarty and Devika Syamnath