Hasbro stock slides on weak Q4 guidance, cost reduction plan

Yahoo Finance Live anchors discuss the decline in stock for Hasbro following earnings.

Video Transcript

[AUDIO LOGO]

JULIE HYMAN: We got a couple of minutes until the opening bell. Let's check in on some trending tickers right now. Hasbro definitely on our list. It's announced it will implement organizational changes. That is a euphemism, maybe, for cutting jobs. That's 15% of its workforce in order to reduce costs. The toymaker also issuing some weaker-than-expected guidance for the fourth quarter.

Revenue could fall 17-- as much as 17%. And the company said, fourth-quarter earnings will be $1.29 to $1.31. That is way below the $1.49 that analysts had been estimating. So not good, Brian Sozzi.

BRIAN SOZZI: Not good. And I think back-- I did my take on Hasbro. They did an Investor Day a couple of months ago and put out really these outlandish longer term guidance ranges, which I said at the time looked completely foolish. And they look even more foolish today in the context of seeing fourth-quarter sales down 17% year-over-year.

And I talked to a couple of investors in Hasbro. And they're just very disappointed by the execution at the company. They're waiting for some of these cost cuts that Hasbro has promised to really start to flow through to the bottom line. That has not happened yet.

And you-- this notion that toys, I think, are recession proof could be tossed right in the trash. Brad, I went to Target the final few days ahead of Christmas, and a lot of Hasbro's board games were collecting dust on their shelves.

BRAD SMITH: Look, I'm gonna look at one of the bright spots here, "D&D." A lot of "D&D," "Dungeons & Dragons" fans out there can be very pleased that Hasbro is saying this is still going to be a bright spot. It's also a big year for "Dungeons & Dragons," got a new motion picture coming out.

And we know how well many of these action figures and toys will do off the back of a motion picture. I believe that drops actually sometime soon, March 31, I believe is that release date. And so for the fans of Chris Pine and Regé-Jean Page, they can--

JULIE HYMAN: Oh, that's who's in it?

BRAD SMITH: Yeah. Great cast.

JULIE HYMAN: I'm fans of those two people there.

BRIAN SOZZI: Interesting.

BRAD SMITH: There we go.

JULIE HYMAN: Big fan. I will say also remember there was a resurgence, I think, because of "Stranger Things," because the kids in "Stranger Things" were big "D&D" heads. And so I feel like that was one of the--

BRAD SMITH: The Hell Fire Club.

JULIE HYMAN: --things that helped kick off--

BRIAN SOZZI: I was not a "D&D" person.

JULIE HYMAN: And I was never-- which is weird because I'm a huge nerd, that I was never played "Dungeons & Dragons."

BRIAN SOZZI: Well, speaking of all this digital world, you know, Wizards of the Coast, they continue-- Hasbro continues to be dragged on social media, whether it's on YouTube, these real hardcore followers on how they may have damaged that brand by flooding the market with various cards. So that is something I think a lot of investors are watching and mining the internet for--

BRAD SMITH: Flooding the market?

BRIAN SOZZI: --more information. Yeah, they basically-- they saw the digital brand. They wanted to make more money for it. They flooded the market all these cards and all this extra stuff. The market wasn't supportive of them doing this. And the true hardcore gamers have backlash against Hasbro. And it has become a risk, that key brand.