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Why Hasbro Stock Lost 11% in December

By Demitri Kalogeropoulos - Updated Apr 11, 2019 at 10:59PM

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Investors are nervous about the toy giant's short-term earnings prospects.

What happened

Check out the latest Hasbro earnings call transcript.

Shares of Hasbro (HAS 1.68%) trailed the market last month, shedding 11% compared with a 9% slump in the S&P 500, according to data provided by S&P Global Market Intelligence.

The drop pushed shares into modestly negative territory for the full year, down 11% compared with the market's 6% decline.

A woman and a girl shop for toys.

Image source: Getty Images.

So what

Hasbro didn't update investors on its sales trends last month, so much of the stock's decline likely had to do with the market's historic drop. It's last quarterly report, in late October, showed that the toy giant is still working through issues caused by the liquidation of Toys R Us, a key distributor. Revenue dropped to $3.1 billion over the past nine months from $3.6 billion in the year-ago period, and operating profit dove to $320 million, or 10% of sales, from $539 million, or 15% of sales.  

Now what

The operating decline should be short-lived as Hasbro quickly shifts to other partners to distribute its toys and games. CEO Brian Goldner recently told investors that a "growing array of retailers" were seeking its products for the key holiday shopping season.

Investors are still nervous that the industry disruption could open the door to new rivals including Amazon. But for now, the focus will be on how well the company performed over the holidays when it reports year-end results in early February.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Demitrios Kalogeropoulos owns shares of Amazon and Hasbro. The Motley Fool owns shares of and recommends Amazon and Hasbro. The Motley Fool has a disclosure policy.

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