Hasbro (HAS) reported a first-quarter operating loss for the consumer products division on Wednesday amid largely flat sales even as the toymaker delivered stronger-than-expected results at the consolidated level.
The segment's adjusted operating loss increased by 31% year over year to $40.5 million.
"The loss reflects higher royalty expense, incremental tariffs and the impact of prior year licensing strength," Chief Financial Officer Gina Goetter said on an earnings call, according to a FactSet transcript.
Revenue for the consumer products business slipped to $397.9 million from $398.3 million a year ago as gains in Europe and Latin America were countered by declines in North America. Asia Pacific sales were flat.
Higher toy and game volume failed to lift the segment as licensing revenue fell due to a tough comparison, Goetter told analysts.
Shares of Hasbro, home to GI Joe action figures and digital games such as "Magic: The Gathering," plunged 8.3% intraday Wednesday. The stock is up 8.7% year-to-date.
Consolidated revenue for the quarter ended March 29 jumped 13% annually to $1 billion, exceeding the FactSet-polled consensus estimate of $969.2 million. Adjusted earnings rose to $1.47 per share from $1.04 a year earlier, compared with analysts' $1.20 view.
"Product mix and scale were more than able to offset the headwind of higher royalty and operating expense," Goetter said on the call.
Sales within the Wizards of the Coast and digital gaming division rose 26% to $582 million.
For 2026, Hasbro continues to expect overall revenue to rise 3% to 5% at constant currencies. Analysts are looking for full-year sales of $4.96 billion, up from $4.70 billion reported for 2025.
"The macro environment continues to require agility, including absorbing and offsetting the impact of rising oil costs across the business, which impacts our freight, resin and packaging costs," Goetter said on the call. "While the impact of higher inputs won't be realized until the back half of 2026, we have several actions underway across a variety of operating levers, including freight optimization, mix management, and operating spend reductions to mitigate the impact."
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