Hasbro Inc. beat revenue estimates amid a challenging second quarter for the entire toy industry.
The company says that revenue slipped 10% to $1.2 billion compared to the same period last year while revenue from Consumer Products — including toys and games — dipped 11% to $655 million. In the Consumer Products segment, the company says that it saw an 18% gain in licensing revenue as part of its ongoing deployment of the Blueprint 2.0 strategy. In terms of Hasbro-owned franchises, a trio of big brands saw growth in Q2, including Transformers (83%), Dungeons & Dragons (74%), and Peppa Pig (15%).
The Hasbro team delivered a solid second quarter, with revenue ahead of our expectations, significant reduction of inventory, and meaningful progress toward our transformation and cost savings programs. New products are delighting our fans around the world, including the return of Furby and the release of Magic: The Gathering's Universes Beyond set, The Lord of the Rings: Tales of Middle-earth, which is already the second largest set in Magic's history. Transformers entertainment and innovation is driving strong growth in the brand."
According to Gina Goetter, Hasbro’s Chief Financial Officer, during the first half of the year, the company’s performance has been at or above its plan.
“Looking at our full year, our Consumer Products segment remains on track and our Wizards of the Coast and Digital Gaming segment is performing better than expected,” she says. “Positive proof points are emerging across a variety of our transformation initiatives as we lower costs, improve productivity, and reset Hasbro for profitable growth.”
As for the future, Cocks notes that the sale of its eOne Film and TV business to Lionsgate will help the company refocus on what’s made the company great over the past 100 years: its core toy and game business.
“Storytelling is part of our mission, and Hasbro will keep producing compelling entertainment that helps bring our beloved brands to life. The sale allows us to focus on our core toy and game expertise, partner with the industry’s best, and strengthen our balance sheet as we invest to drive long-term growth and return cash to shareholders,” Cocks says.
In the meantime, Hasbro may see a slight hit to its earnings due to the ongoing WGA and SAG-AFTRA strikes as the eOne content delivery pipeline dries up before the closing of the Lionsgate deal. As such, Hasbro updated guidance to include a 3-6% dip in entertainment revenue for the year.
In the toy department, the larger area of concern might be if entertainment content from Hasbro’s licensing partners, including Marvel Studios and Lucasfilm, is disrupted causing a misalignment of toy and content releases. The last similar occurrence took place during the pandemic when theatrical releases were bumped and related toys were already on store shelves.
