Strong growth from iconic brands couldn’t stop a dip in Hasbro‘s third quarter earnings this year.
The toy and game maker reported a 10% dip in revenue to $1.5 billion in Q3. Compared to the same period last year, its Consumer Products division (including toys) slid 18% while Entertainment revenue declined by 42%. The losses were offset by strong growth in Wizards of the Coast and Digital Gaming where revenue spiked 40% in Q3 driven by the licensing success of Baldur’s Gate III and Monopoly Go!, which Hasbro says contributed $63 million in incremental revenue to the bottom line.
Hasbro’s earnings reflect the reality of the challenges facing the broader toy industry this year. In many ways, 2023 has been a reset year for the industry following three years of pandemic-skewed sales numbers. Hasbro, like all major toymakers, is in the final stages of clearing the inventory pipeline following last year’s soft holiday season and canceled orders by retailers in the first half of this year.
Our third quarter results highlight the strength of Hasbro’s diversified toy and game portfolio and the progress we have made on our transformation. Wizards of the Coast and Digital Gaming delivered a standout performance across strength in Magic: The Gathering and Dungeons & Dragons, particularly the blockbuster August release of 'Baldur's Gate III.' We are taking action to address the tougher macro environment across Toys and Entertainment and are positioning the company to return to profitable growth. Building on the strategy we outlined a year ago, we're growing share behind our Franchise Brands in core categories, driving savings and investment capacity through operational excellence, and building new growth for the Company across games, direct-to-consumer and licensing. With the upcoming sale of the eOne Film and TV business, we are refocusing our company on what has traditionally made us great, the business of play."
The decline in Consumer Products revenue was driven by the combination of softness in the toy department, the exit of licenses — including Disney Princess and Frozen — and tough comps against 2022 entertainment releases.
For the first nine months of 2023, Hasbro’s revenue declined 11% versus last year to $3.71 billion.
In Q3, Hasbro says that strong growth in G.I. Joe and the relaunched Furby partially offset declines in Portfolio Brands while growth in Dungeons & Dragons (more than 100%), Transformers (29%), Magic: The Gathering (20+), and Hasbro Gaming (3%) led to an 8% revenue spike for its Franchise Brands.
Heading into the holiday season and the end of the year, Hasbro updated its guidance for 2023 to reflect an anticipated revenue decline of 13-15% for the year driven by a softer outlook for toys.
