Hasbro said lead times for shipping its toys and games from China have tripled and that it expects similar challenges and supply chain disruptions to persist in its current fiscal year.
The US toymaker managed to navigate supply chain issues in the fourth quarter of 2021 because of strong demand for its toys during the holiday season, although its inventory levels were lower than it anticipated.
Deborah Thomas, chief financial officer, told analysts during an earnings call on Monday that shipping lead times from China have tripled on average. The company is also battling higher transport and product costs.
“These higher capitalised costs are expected to have a negative impact on gross margin in the first quarter, prior to price increases taking effect,” Thomas said.
Hasbro said it expects price increases, scheduled for the second quarter, to help absorb some of the higher costs of production, but it still anticipates obstacles with freight and input costs to persist in 2022.
Thomas said the third quarter will be challenging because the company does not have any big hits scheduled to boost revenue during that period, unlike last year when its Netflix movie My Little Pony: A New Generation was released.
Along with its other gaming and entertainment products, the movie helped boost overall revenue even though sales from the consumer products segment, Hasbro’s largest segment, declined 3 per cent from the previous quarter because port congestion led to missed orders.
Richard Stoddart, Hasbro’s interim chief executive, said on Monday the company is still optimistic revenue will grow at a low single-digit rate in fiscal 2022.
