Toy and gaming big Hasbro topped Wall Road expectations for the second quarter as energy in its digital gaming division helped offset continued weaknesses in its conventional toy enterprise, weighed down by the impression of tariffs.

“While tariffs represent a headwind for the business,” Hasbro’s CEO, Chris Cocks, stated on the corporate’s earnings name. “We are compensating for these costs through a combination of cost reductions, rebalancing our marketing spend, diversifying our supplier mix and implementing some targeted pricing actions.”

Shares of the corporate fell roughly 4% in Wednesday morning buying and selling.

Here is how Hasbro carried out within the quarter ended June 29 in comparison with what Wall Road was anticipating.

• Earnings per share: $1.30 adjusted vs. 78 cents anticipated
• Income: $980.8 million vs. $880 million anticipated

The toy firm reported a web lack of $855.8 million, or $6.10 per share, for the interval, in contrast with web revenue of $138.5 million, or 99 cents per share, within the identical quarter a yr in the past.

Hasbro attributed the loss to a $1 billion goodwill impairment associated to its client merchandise phase and the impression of tariffs.

Total income declined 1% from the identical quarter final yr, however the firm’s gaming division continued to outperform. Wizards of the Coast and digital gaming introduced in $522.4 million in gross sales, up 16% yr over yr. Hasbro cited robust demand for Magic: The Gathering and Monopoly Go!

“This isn’t just a one-off moment. It’s a clear indication of the power of Magic’s community,” Cocks stated. “Magic is stronger than ever, and we’re just getting started.”

In the meantime, the corporate’s client merchandise phase noticed income fall 16% to $442.4 million, pressured by “anticipated softness in Toys driven by retailer order timing and geographic volatility,” Hasbro stated within the launch.

Income within the leisure phase dropped 15% to $16 million.

Hasbro raised its full-year steerage and now expects mid-single-digit income progress, adjusted earnings earlier than curiosity, taxes, depreciation and amortization, or EBITDA, of between $1.17 billion and $1.2 billion, and adjusted working margins of twenty-two% to 23%.