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Hasbro feels toys tariff fallout as Q3 delivers lower than expected financials

Hasbro has felt the fallout of the US-China tariff tiff, pointing towards the threat of further taxes on toys as a reason for its lower than expected third quarter financials.

Hasbro booked net earnings of $212.9 million or $1.67 a share in Q3 this year, down from $263.9 million, or $2.06 a share, in the same quarter one year ago. Adjusted per-share earnings were $1.84 below analysts’ average estimate of $2.21.

With a large portion of its manufacturing coming out of China, Hasbro has been somewhat caught in the crossfire of the trade war between Beijing and the White House. A number of the group’s games were hit by tariffs in September this year, leading increased pricing.

On top of this, Hasbro reports that the proposed new round of tariffs – set to take effect in December – has caused retailers to cancel direct import orders and switch many to domestic shipments. Hasbro has been faced with additional shipping and warehousing expenses as it made to shift inventory to the US.

Hasbro’s CEO, Brian Goldner, said: “Hasbro remains on track to deliver profitable revenue growth in 2019, behind innovation in gaming, toys and around Hasbro’s Brand Blueprint. However, as we have communicated, the threat and enactment of tariffs reduced revenues in the third quarter and increased expenses to deliver product to retail.”

It was last week that Hasbro’s board of directors and shareholders at Entertainment One agreed to the $4bn acquisition of the media company by Hasbro. The move will see popular pre-school brands such as Peppa Pig and PJ Masks join Hasbro portfolio as the toymaker looks to strengthen its content and pre-school offering.

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