American toy and board game manufacturer Hasbro Inc missed hitting analysts' estimates for its quarterly profits on Tuesday.
The toymaker attributed the decline in its profits to the high logistics and warehousing costs, which is a direct result of US President Donald Trump's recently imposed tariffs on Chinese imports.
Hasbro openly blamed the ongoing trade dispute between China and the United States for its less-than-stellar quarter performance. Other US companies, which import components and materials from China, have also expressed much of the same sentiments.
For its third quarter, Hasbro reported revenues of $1.58 billion with earnings of around $1.84 per share. This was well below initial analysts' earnings expectations of $2.21 per share.
Due to the increased tariffs and other costs, US companies such as Hasbro have been forced to implement different strategies to compensate.
These strategies include increasing product prices, downsizing, and even moving entire production facilities outside of China. Each strategy does have its own drawbacks, which ultimate either increase costs or reduce overall sales.
Hasbro, in particular, has been greatly affected by the imposed tariffs as it does import more than two-thirds of its products from China. The company has tried to look for other suppliers outside of China and it has already raised its prices to offset its growing costs.
Hasbro CEO Brian Goldner mentioned during the company's earnings call that the tariffs have caused a significant disruption in its growth trajectory.
The executive is however still optimistic that the disruption would only be for the short term as it does have some plans to combat its increasing costs.
The company does expect further disruptions for its fourth quarter given that the deadline to impose new tariffs has been moved to December. In conjunction with the imposition of the new tariffs, Hasbro warned that it may be forced to impose new price hikes for its products to cushion the blow.
Despite its struggle to compensate for its increasing costs, Hasbro mentioned that it will still be ramping up its investments in the development of new games and toys. The company also mentioned that it will continue to invest in buying out smaller firms and closing major deals with production houses and other properties.
In line with its statement, Hasbro had mentioned that it will still be moving forward with its planned $4 billion acquisition of Entertainment One. The acquisition should allow the company to take advantage of Entertainment One's popular brands such as PJ Mask and Peppa Pig.
