Toymakers, including Hasbro and Mattel, experience a decline in share prices as they predict a subpar holiday season.

• Amid a challenging retail landscape, Hasbro and Mattel adjusted their sales projections for the fourth quarter.
• On Thursday, while Mattel experienced an 8% decline, Hasbro's stock dropped by 12%.

On Thursday, the shares of and dropped, as both toy companies predicted a decline in sales during the fourth quarter.

On Thursday, while Mattel experienced an 8% decline, Hasbro's stock dropped by 12%.

As they separately reported their third-quarter earnings, the companies acknowledged the challenges they face entering the critical fourth quarter. With consumers cutting back on spending due to inflation pressures, the holiday season could see toys and games, products both Hasbro and Mattel are known for, on the chopping block.

Hasbro, the company that owns popular brands such as Play-Doh and Monopoly, has revised its full-year revenue guidance. Instead of projecting a 3% to 6% decline, it now expects a 13% to 15% decrease in revenue for the year. The company attributed this change to a "softer toy outlook."

During Hasbro's earnings call on Thursday, CEO Chris Cocks expressed a cautious outlook on the holiday, stating that the company does not have a solid view on where the market will go.

Despite Mattel's strong third-quarter results, its implied fourth quarter guidance on toy sales spooked Wall Street on Wednesday.

Analysts at Citi Research said Thursday that Mattel's business outside of Barbie products is expected to have lackluster performance, which largely offset the company's third-quarter earnings that beat expectations.

Hasbro's third-quarter report missed analyst expectations compiled by LSEG, formerly known as Refinitiv. The company's adjusted earnings per share of $1.64 missed expectations of $1.70 a share, and revenue of $1.5 billion missed an estimate of $1.64 billion.

Hasbro's revenue decreased by 10% in the quarter compared to the previous year, mainly due to declines in its consumer and entertainment segments. Meanwhile, Mattel experienced a 9% revenue increase on Wednesday, primarily due to the success of Barbie sales and the summer film.

Sales of Hasbro's consumer segment, which includes popular toy brands such as Nerf, My Little Pony, and Transformers, decreased by 18%. The company attributed the decline to "exited licenses and softer category trends."

Hasbro's entertainment segment revenue decreased by 42% year over year, mainly because of the writers' and actors' strikes. The company announced earlier this year that it plans to sell its film and TV business eOne, which produces Peppa Pig, to Lionsgate for $500 million.