Sanrio Co. shares fell as much as 20%, the steepest drop in over 12 years, after a first‑quarter operating income miss disappointed analysts. The company reported a loss of $32 million in operating income, compared with an estimated $18 million profit, according to Bloomberg Markets. The market reaction was swift, with the stock sliding from $26.50 to $21.00 by the close.

The miss came amid a broader slump in the toy and character‑merchandise sector, as online sales slowed and inventory levels rose. Sanrio’s guidance for the full year was unchanged, but the company reiterated its focus on restructuring and cost‑cutting measures to improve profitability. Analysts noted that the company’s core franchises, such as Hello Kitty, remain strong but face stiff competition from newer digital products.

In the days following the earnings release, institutional investors reduced their holdings, and the company’s debt‑to‑equity ratio increased to 1.5x. Sanrio’s management emphasized that they are reviewing licensing agreements and exploring new markets, including Asia‑Pacific expansion. The stock remains volatile as investors reassess the company’s long‑term outlook.