Hasbro Inc said on Tuesday it would raise prices of toys and games to counter higher raw material costs as the company sees surging demand for its Nerf blasters and board games from families spending more time at home.
Shares of the Monopoly maker, which late on Monday announced the sale of Entertainment One Music to Blackstone Group Inc for $385 million, rose 1% in morning trading.
The toymaker, like most U.S. manufacturers, has had to contend with rising resin, packaging and metal prices, as well as soaring transportation costs due to high demand and supply disruptions caused by the COVID-19 pandemic.
Rival Mattel Inc last week had flagged expectations for a “significant impact” to margins from higher resin prices and ocean freight charges.
“Freight and input cost increases have become more pronounced over the past several months, and we have plans in place to help mitigate those costs, including price increases for the second half of the year,” Hasbro Chief Financial Officer Deborah Thomas said.
Demand for toys has remained robust more than one year into the pandemic, with the company reporting a 14% rise in first-quarter sales in its consumer products unit.
Excluding certain items, Hasbro earned $1 per share, above analysts’ average estimate of 65 cents, according to a Refinitiv IBES estimate.
A drop in advertising around films and TV shows due to the pandemic-forced production delays and theater closures also aided in the profit beat.
However, net revenue rose just 1% to $1.11 billion in the quarter, missing analysts’ estimates of $1.17 billion, as the delays and closures hurt the company’s entertainment production revenue.
Hasbro, like Mattel, said it saw “substantial” opportunity in non-fungible tokens (NFTs) for some of its collectible brands, looking to tap into the explosive growth in popularity of the digital asset.