Please ensure Javascript is enabled for purposes of website accessibility

Why Hasbro Stock Fell 12% in March

By Demitri Kalogeropoulos – Apr 6, 2018 at 1:50PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares dipped in response to news that a key customer is closing up shop.

What happened

Hasbro (HAS -0.69%) stock shed 12% last month compared to a 3% decrease in the S&P 500, according to data provided by S&P Global Market Intelligence.

^SPX Chart

^SPX data by YCharts

That decline left shares in negative territory over the prior 12 months, a period during which the broader market gained 12%.

So what

March's drop came following news that Toys "R" Us, the nation's biggest pure-play toy retailer, is filing for bankruptcy and plans to close or sell all of its stores. The retailing chain is one of Hasbro's key customers, accounting for 9% of sales in fiscal 2017. Thus, the company's liquidation is bound to pressure earnings in the short term while removing a significant sales outlet in future sales years.

A woman and daughter choose a toy at a toy store.

Image source: Getty Images.

Now what

Hasbro is set to post its first-quarter results before the market opens on April 23. Executives will likely to address the Toys "R" Us bankruptcy in that report, including by estimating the impact on sales and profits for fiscal 2018 and beyond.

The industry leader is in a stronger financial situation than rival Mattel, and so this news shouldn't amount to much more than a temporary financial hit. But investors will have a better idea of the scale of the challenge, an what management plans to do about it, by late April.

Demitrios Kalogeropoulos owns shares of Hasbro. The Motley Fool owns shares of and recommends Hasbro. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Hasbro, Inc. Stock Quote
Hasbro, Inc.
$67.42 (-0.69%) $0.47

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.