Toy giant Hasbro says supply chain disruptions prevented it from fulfilling $100million worth of toy orders during the third quarter.
The toys, which were initially set to be delivered within the third quarter, ending September 26, were pushed into the fourth quarter, hurting the company’s latest bottom line.
But Hasbro – one of the world’s largest toymakers – still prospered, bringing in $1.97billion in revenue during the third quarter, an 11 per cent spike over 2020’s third quarter revenue of $1.78billion.
Executives said they plan to grow the company’s revenue by an additional 13- 16 per cent by yearend.
Deborah Thomas, Hasbro’s chief financial officer, said 40 per cent of the company’s retail inventory – which includes My Little Pony, Transformers, Play-Doh, Baby Alive and more -was stuck in transit at the end of the third-quarter.
Her comments come as California’s Los Angeles and Long Beach ports – which move about 40 per cent of shipped cargo entering the US – continue to grapple with an historic container ship backlog.
Habsbro shared the results of its third-quarter earnings during an investor conference call
Toy giant Hasbro says supply chain disruptions prevented it from fulfilling $100million worth of toy orders during the third quarter
The massive logjams are disrupting the supply chain ahead of the holidays as thousands of freight containers sit idly on more than 100 vessels that simply don’t have anywhere to unload.
Last quarter’s delayed goods have arrived, but the container ship chaos continues to challenge companies such as Hasbro.
‘In general, total transit times have nearly doubled across all lanes and on certain lanes. transit times are as much as 50 days longer compared to pre pandemic levels,’ Thomas said.
Thomas said the increased costs brought on by the supply chain crisis – namely the skyrocketing costs of shipping – won’t be passed onto customers.
Thousands of containers sit, waiting to be unloaded from the ports of Los Angeles and Long Beach, where vessel traffic broke all-time records last week as the supply crunch continues
Deborah Thomas, Hasbro’s chief financial officer, said 40 per cent of the company’s retail inventory was stuck in transit at the end of the third-quarter
‘We don’t intend to take additional price increases this year; what we have built-in is there to cover our costs,’ she said.
Supply woes also hurt the company’s consumer products segment, which was down 3 per cent during the third quarter.
The company took steps – including activating alternative ports in China and the US and expanding its shipping capacity – to offset supply chain risks, Thomas said.
It on occasion used air freight to ensure delivery.
Hasbro is expecting double digit revenue growth in the range of 13- to 16 per cent for the year, despite the challenges, Thomas said.
‘We have orders on hand to meet the top end of our guidance range for revenue,’ she said. ‘But we’re feeling the cost pressures that the rest of the industry is feeling and we’re also feeling the supply chain pressures that the rest of the world is facing right now.
‘The important thing is, we’ve got everything in place. There will be Hasbro toys and games on the shelf this holiday season.’
In August, some toy company bosses warned parents to buy ahead this year to avoid disappointing their kids on Christmas morning.
‘There is going to be a major shortage of toy products this year,’ MGA Entertainment CEO Isaac Larian told CNN Business. ‘The demand is going to be there. What is not going to be there is the product to fill the demand.’
Another toy expert told DailyMail.com that the current supply chain crisis is one unseen since World War II when ‘there were submarines sinking commercial traders.’
It’s bringing disaster for shoppers as items are being resold for more than double their cost and shipping delays mean more barren shelves
Holiday shopping is expected to be especially fraught this year, as buyers contend with aggressive resellers and inflated prices – some jacking up toy prices by 400 per cent.
Basic Fun chief executive Jay Foreman – who has been working in the toy industry for more than 30 years – said the current situation is unlike anything he’s ever seen.
‘I would predict that there’s never been anything like this disruption in the global trade supply chain since World War Two,’ he told DailyMail.com. ‘And you know World War Two, with a global supply chain was upset because there were submarines sinking commercial traders. We had a war going on.’
The Biden administration has come under fire for its ‘too little, too late’ response to the backlog after it announced West Coast shipping ports would be running around the clock to ease bottlenecks in the system.
Toy flippers are already charging hefty premiums for sold-out products and computer chip shortages could leave some sought-after items back-ordered for several months.
Toy giant Hasbro manufactures toys such as Play-Doh (left) and Mr. Potato head (right). It’s also the maker of Nerf, Transformers, Baby Alive, My Little Pony, and more
American Girl’s sold-out blonde winter princess doll (pictured left), which retailed for $250, is now going for up to $999 on platforms such as Mercari and eBay. The cat-themed Gabby’s Dollhouse (picture, right), which is all the rage for this year’s preschoolers, has nearly quadrupled on some sites from its original $55 price tag
Mercari marketplace had the Winter Princess going for more than $1,000 with shipping from one reseller
American Girl’s sold-out blonde winter princess doll, which retailed for $250, is now going for up to $999 on platforms such as Mercari and eBay.
The cat-themed Gabby’s Dollhouse, which is all the rage for this year’s preschoolers, has nearly quadrupled on some sites from its original $55 price tag.
Factory closures in China, labor shortages in the U.S., a freight container shortage, and the port backup are among the reasons for retail chaos.
The troubles are compounded by a lack of truck drivers, warehouses unequipped to receive mass amounts of product, the rising cost of fuel and more, Foreman said.
‘Usually there’s 10 or 15 things in a supply chain that can affect whether you get things or not,’ he said. ‘This year, all bets are off and of the 10 or 15 things that make a supply chain tick, eight or 10 of them are all out whack at the same time.
‘Totally unprecedented.’
Amid the frenzy, young shoppers are likely to be most significantly affected by the supply shortage, a recent Morning Consult survey indicated.
A Morning Consult survey published last week indicated that half of Americans have not yet begun their Christmas shopping – which means the supply chain crisis could be exacerbated as more and more shoppers look to make purchases
About 70 per cent of Generation Z and millennial holiday shoppers said an item they wanted was already out of stock in stores and 72 per cent said an item was out of stock online; 65 per cent found an item to be backordered or delivery delayed
About 70 per cent of Generation Z and millennial holiday shoppers said an item they wanted was already out of stock in stores and 72 per cent said an item was out of stock online; 65 per cent found an item to be backordered or delivery delayed. Responses were gathered from October 1-3.
Another Morning Consult survey published last week indicated that half of Americans have not yet begun their Christmas shopping as of October 11 – which means the supply chain crisis could be exacerbated as more and more shoppers look to make purchases.
About half of shoppers who have started buying gifts experienced supply chain issues, the survey found.