Hasbro’s poor earnings report tells a trade war story

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The calendar proper says it's fall all the counter according to Wall Street says it's earning season and in general corporate America's doing alright that sentiment however does not extend to Hasbro the third quarter was not kind the toymaker reported profits of this morning that we're well below estimates of earnings news that is actually the story of the trade war in miniature three of tariff announcements and delays and the chaos that makes it one company just ahead of its most important season marketplace's Merrill Sagarra tells the tale in the Toy Business Chris Miss Comes in the summer that's when retailer start stocking up getting shipments of toys from Hasbro and other manufacturers they can buy those toys directly from Hasbro in the US were they can import the toys from Hasbro factories the retailer buys the product from them in China the retailer puts it on their own ship you know there's a lot mark target the big guys and they ship it to the US themselves that's Linda Bolton Wiser managing director at Da Davidson? She says a lot of retailers do this because it's cheaper they get discounts is an economy of scale but the calculation was different this summer retailers were staring down a deadline September first that was when new tariffs were supposed to go into effect on toys and lots of other stuff coming from China tariffs the retailers did not want to pay therefore if you're a retailer between June and July August you're saying Oh my God we have to change the order retailers started cancelling their shipments from China they told Hasbro to import the toys itself and tariffs to Hasbro had to scramble they had the rush around and get whatever freight on the ocean from China and they had to pay more you're but those tariffs everyone was freaking out about they didn't go into effect in September in August the trump administration delayed them until mid December to save the holiday. being season but that didn't help Hasbro the toys have already been put on the bow it takes six weeks on the boat so it's too late you can't switch it back you know and that's the problem it's not just the tariffs it's the whole on again off again thing the uncertainty Garrick Johnson is equity research analyst at B. M. O. Capital markets uncertainty is often worse than bad news because you do assume the worst and not knowing how to plan especially for very seasonal business has been very different old and this won't be the end of it for Hasbro because those tariffs are still slated to go into effect on December fifteenth unless they don't I'm Maryelle Sagarra for marketplace

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