The board game Monopoly by toymaker Hasbro at a toy store in New York City.
Despite strong demand for toys in the quarter, Hasbro’s revenue fell 29% on a pro forma basis.
Shares of the company were down 6.8% in premarket trading Monday, on the weaker-than-expected results.
For the quarter ended June 28, Hasbro posted a net loss of $33.9 million, or 25 cents per share, compared with a profit of $13.4 million, or 11 cents per share, a year ago.
Excluding items, Hasbro earned 2 cents a share. Analysts surveyed by Refinitiv expected Hasbro to earn 23 cents a share.
Revenue fell to $860.3 million, which was shy of the $922 million analysts expected.
Nearly 30% of its global toy and game revenue came from online sales.
The company’s gaming portfolio remained strong during the quarter, with revenue in the category rising 11%, fueled by sales of Jenga, Connect 4, Mouse Trap and Twister. However, disruption in Hasbro’s supply chain resulted in stock levels being low and limited its number of shipments during the quarter.
Hasbro said that shipments and sales improved as stores began to reopen late in the quarter. It said this trend continued into July.
“We believe the outlook improves from here,” Hasbro CEO Brian Goldner said in a statement. “We expect the environment to improve in the third quarter and set us up to execute a good holiday season.”
Factories in China, which represent 55% of Hasbro’s production, were open during the quarter, but locations in the U.S., Ireland and India were closed for most of that period. The company is targeting the latter part of the third quarter to be caught up, Debbie Hancock, senior vice president of investor relations, said during the earnings conference call Monday.
Hancock noted that the cost of air freight has risen during the pandemic, warning that if the company needs to rely more heavily on this method of shipping to meet demand, costs will go up.
Hasbro, which works with major studios, also took a hit from movie theaters being closed and a lack of new blockbuster features being released on the big screen. Goldner noted that the company has a strong entertainment line-up for 2021 with partnerships and for its own slate of films.
While live-action TV and film production has been hindered by the pandemic, animation production has continued for brands like Peppa Pig, PJ Masks and Hasbro’s upcoming “My Little Pony” feature film.
Hasbro’s distribution company eOne has about 100 TV projects in development and another 60 movie projects in the pipeline, including projects around more than 30 of the company’s properties.
Sales of action figures across the toy industry have been sluggish because of the delay to the movie slate. Hasbro holds the master toy license for both Marvel and Star Wars. Still, Hasbro said that sales remained strong for its “Frozen 2” and “Star Wars” collections.
Hasbro did face tough comparisons in the action figure category because of the success of “Avengers: Endgame” last year, which fueled sales.