US toymaker Hasbro cut its full year outlook and expects revenue in its current quarter to decline more than expected, as inflation and a strong dollar weigh on sales.
The Rhode Island-based company announced at its investor day on Tuesday that it now expects full-year revenue growth to be flat or slightly down in constant currency, compared to previously forecasting low single-digit revenue growth.
It also expects third-quarter revenue to decline 15 per cent without adjusting for currency fluctuations, missing analysts’ forecasts for revenue to slide 4 per cent.
Three months ago at the company’s second-quarter results, chief executive Chris Cocks singled out inflation, the strong dollar and the “Russia conflict” as headwinds for Hasbro this year.
Although inflation has moderated in the US in recent months, the annual pace of price increases still remained at a high of 8.3 per cent in August. Retailers such as Target and Walmart have reported consumers shifting their spending habits to lower-priced items because of persistent inflation.
The strong dollar has exacerbated inflation issues, as American goods become relatively expensive for consumers abroad. Three months ago, Cocks said the strengthening dollar affected the consumer products segment in the Europe, Middle East and Africa market and its gaming business.
The euro, which has reached parity with the dollar in recent months, is Hasbro’s largest international currency exposure. The company, in second-quarter earnings remarks, said it expected an additional negative impact on its consumer product segment revenue of $30mn to $40mn.
The US dollar index, which measures the greenback against a basket of peer currencies, sat at about 104 when Hasbro’s second quarter ended on June 26. The index has strengthened 6 per cent since then to about 110.2 on Tuesday, but reached a record 114.11 in late September.
