Considering the impact the demise of Toys R Us had on Hasbro's (NASDAQ:HAS) earnings, the toy maker might have better spent the half billion dollars it just dropped on buying the Power Rangers to buy the toy store instead.

The Toys R Us liquidation was a big blow to Hasbro because the retailer brought in 9% of total sales, second in importance only to Walmart (NYSE:WMT), which accounts for 19% of sales. Target (NYSE:TGT) accounts for another 9% of sales.

Hasbro's first-quarter revenue tumbled 16% year over year, and adjusted per-share profits plunged 81%, which was blamed on the toy store's closure and subsequent inventory liquidation. The second quarter is looking rather bleak, too, as a result, though Hasbro says the back half of the year, particularly the important fourth quarter, should be impacted to a lesser degree.

That's because other retailers like Walmart and Target are expected to pick up a lot of the slack, expanding their own toy departments to make up for the anticipated demand they'll see from consumers. While it's possible other stores will offset the hit Hasbro and rival Mattel took from the situation, it's also quite possible that because toys are a secondary consideration to these chains, the retailers' uptake of excess inventory might not be as great as hoped.

The world's biggest toy box

Toys R Us was special because it was the one place kids could go to simply buy toys. Walmart taking up some of this demand is fine, but it makes Hasbro even more dependent on the retailer and further reduces the leverage the toy maker has for negotiating on price. Although this change would give the toy maker more shelf space, it may very well pinch its profits in the end.

Power Rangers movie cast

Image source: Saban Properties.

Hasbro should have considered using the $522 million it agreed to pay Saban Properties for the rights to the Power Rangers characters to instead help MGA Entertainment executive Isaac Larian buy Toys R Us.

Larian tried to buy the toy store for $890 million, but the bid was rejected as too low for the value of the assets he would be acquiring. He's thought to be trying to mount a second attempt, though he admits the liquidation devalues the business.

The maker of Bratz dolls and Little Tikes toys has said he was disappointed in his fellow toy makers for not backing his efforts. Larian told the Los Angeles Times that after giving him initial support for the concept, the other toy companies backed out. He blamed the decision on the short-term thinking of publicly traded companies.

A chance to morph again

The Power Rangers franchise does have a 25-year history, and the brand's live-action TV shows make up one of the longest-running kids' series in TV history, but its movie-making prowess leaves something to be desired.

The last Power Rangers movie made $142 million worldwide, according to Box Office Mojo, or only slightly more than the $100 million estimated production costs. After a strong $40 million open, the movie lost nearly two-thirds of its audience in the second week, an especially steep drop-off that suggests the Power Rangers' staying power is a bit dubious. It also suggests the amount of money Hasbro spent on acquiring the franchise was rather steep.

Hasbro certainly has the range to handle the many aspects of the characters' merchandising. Thanks to its own TV and movie studios and its action figure capabilities, the toy maker can easily cross-market and expand the reach of the Power Rangers. But with a portfolio of characters already in its possession, some of which will overlap the interests of a few of the other brands included in the Saban deal, it seemingly makes the deal superfluous to Hasbro's future success, at least in comparison to saving Toys R Us.

Partial view of the outside of a Toys R Us store

Image source: Toys R Us.

The toy store would have given Hasbro a dedicated platform from which to sell its toys, arguably one situated to offer a better return on the money invested. As Hasbro had already secured the rights to manufacture and market Power Rangers toys for $22 million (an amount that was applied to the purchase price), spending $500 million to buy the brand might not have been necessary. The toy maker could have had the best of both worlds, particularly as Toys R Us previously had exclusive rights to certain Power Rangers characters, like the Legacy Megazords.

No doubt Hasbro will use its marketing savvy and muscle to try to make the Power Rangers deal pay off; but whether it will ultimately prove to be the best use of shareholder resources in the face of a loss of a major toy outlet like Toys R Us remains to be seen.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.