(Reuters) - Hasbro Inc HAS.O fell well below Wall Street estimates for quarterly profit on Tuesday, as the toy maker wrestled with higher shipping and warehousing costs due to U.S. tariffs on Chinese imports, sending its shares down about 18%.
The protracted trade war between the world’s two largest economies has been weighing on many U.S. companies that have exposure to China and they have responded by taking various steps ranging from price hikes to shifting production to other countries.
Hasbro, which sources more than two-thirds of its U.S. products from China, is also looking at other countries for suppliers, while raising prices to combat increased costs from tariffs.
“Obviously, the tariff and tariff environment has created some short-term disruption to our growth trajectory,” Hasbro Chief Executive Officer Brian Goldner said on a post earnings call.
The uncertainty over tariffs on toys and other items in the latest quarter forced retailers to cancel or delay orders and the company expects to face disruptions in the fourth quarter as the deadline to impose new levies has been pushed to Dec. 15.
Hasbro also warned of price hikes if the Dec. 15 tariffs go into effect. It has already raised prices on some of its products to cushion the blow from tariffs that went into effect in September.
Despite tough market conditions, the company is investing in launch of new games, buying smaller firms and striking deals with production houses to boost sales of its toys.
As part of the strategy, Hasbro said in August it would buy Entertainment One for about $4 billion, adding popular brands such as Peppa Pig and PJ Masks.
Hasbro posted smaller-than-expected revenue of $1.58 billion and earned $1.84 per share excluding items in the third quarter, well below expectation of $2.21, according to IBES data from Refinitiv.
Shares of the company hit an intraday low of $98.85 and were set for their worst day since 2000.
Reporting by Praveen Paramasivam in Bengaluru; Editing by Sriraj Kalluvila and Anil D’Silva
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