Hasbro (HAS, Financials) saw its shares climb 15.7% to $60.98 as of 2:56 p.m. ET Thursday after posting better-than-expected earnings. But even with the market rally, the company flagged a serious risk: tariffs on Chinese imports could cost it up to $300 million next year.
The toy giant is preparing for a range of trade outcomes, depending on whether a proposed 145% tariff on Chinese goods goes through. CFO Gina Goetter said the company's forecast accounts for different scenarios, with possible losses between $100 million and $300 million before any cost-saving measures kick in.
CEO Chris Cocks said higher tariffs would likely lead to price hikes and possible job cuts. While parts of the business—like board games and licensing—are more insulated thanks to U.S.-based production, most toys are still made in China.
Hasbro is looking at shifting some of its supply chain. One idea: move Play-Doh manufacturing from China to Turkey. But Cocks admitted that relocating production isn't simple, especially for toys with electronics or custom components. He added that China's decades of expertise make it hard to replace as a manufacturing base.
In the meantime, the company is pushing ahead with a $1 billion cost-cutting plan and says any price increases will be as targeted as possible.
Hasbro said bigger shifts in its supply network won't show up until 2026 at the earliest—and everything depends on how trade policy evolves.
