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When Hasbro Inc. thanked the Trump administration in August for delaying new tariffs on Chinese toy imports until Dec. 15, it may have been celebrating too soon.
The toymaker tumbled as much as 18% Tuesday after reporting weaker-than expected third-quarter profit, a disappointing result it largely blamed on tariffs that aren’t even in place yet. The challenging quarter for Hasbro is just the latest example of U.S. companies issuing warnings about President Donald Trump’s trade spat with China.
“The threat and implementation of tariffs negatively impacted our quarterly results,” Hasbro Chief Executive Officer Brian Goldner said on a call with analysts. “Importantly during the third quarter alone we saw multiple different dates for the enactment.”
The shifting nature of when duties on toys would be implemented -- they were initially set for September, but are now slated for less than two weeks before Christmas -- significantly disrupted orders and the company’s supply chain. For example, some U.S. retailers that had placed large direct-shipment orders from China canceled them in July and August and asked for domestic shipments from Hasbro instead. Some of those requests were fulfilled, but the toymaker said it wasn’t able to rewrite all of the nixed orders in time.
The company expects continued disruption this quarter as the tariffs are implemented -- assuming no trade deal is reached before then. Goldner tried to ease concerns by pointing out Hasbro is on track to reduce U.S. sourcing from China to 50% by the end of 2020.
“We are having good success identifying and building products and geographies, including Vietnam, India and others,” he said.
Shares fell the most intraday since 2015 in Tuesday trading. The stock had advanced almost 50% this year through Monday’s close, more than double the gain of the benchmark S&P 500 Index.
(Updates with details from call)
--With assistance from Karen Lin, Janet Freund and Jonathan Roeder.
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