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A Tale of Two Toy Stores

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Friday, February 8, 2019

While we continue to monitor Q4 earnings season — which is currently completing its heaviest week, in terms of quantity, so far — we also see the ratcheting down of marquee names reporting this morning, or even after the bell next week. But as we expect a new Earnings Preview for another week-long session from Zacks Director of Research Sheraz Mian, we have this article from two days ago that sets the table for our understanding of Q4 earnings season overall: Q4 Earnings Picture Better than Feared

Notably this morning, Hasbro (HAS - Free Report) has missed badly and Mattel (MAT - Free Report) outperformed. Both companies exist within the morass of the Toys - Games - Hobbies sector, which is nothing to write home about. But one company has managed to surpass expectations while the other has disappointed.

Hasbro, a Zacks Rank #4 (Sell)-rated company before the earnings report, put up just $1.33 per share in its Q4 bottom line, in contrast to the $1.68 expected. This amounts to a 42% downgrade year over year. Revenues also came in light: $1.39 billion versus $1.524 billion estimated. This is the third EPS miss in the last 4 quarters for the company, although part of its costs relate to the continuation of the Toys R Us liquidation. For more on HAS’ earnings, click here.

Mattel, on the other hand, also had a Toys R Us issue, but managed to swing to a profit of 4 cents per share in its Q4 earnings, as opposed to the -11 cents analyst were thinking. Sales of $1.524 billion in the quarter was well ahead of the $1.418 billion expected. Worldwide grosses were down 11% year over year, and only 2% of that can be attributed to foreign exchange rates. The company’s numbers per business were still down year over year, but this represents the third straight quarterly beat, following SEVEN straight quarters of earnings misses. For more on MAT’s earnings, click here.

Mark Vickery
Senior Editor

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