Dive Brief:
-
Amid speculation that Hasbro is considering its own bid for rival Mattel, the toy company on Thursday reported second-quarter revenue fell 18% year over year to $995 million, down from about $1.2 billion the year prior. Excluding last year’s sale of its eOne film and TV business, Hasbro said revenue declined 6%.
-
The toy company swung to an operating profit of $212 million from a loss of nearly $189 million last year. Net earnings for the quarter were $138.5 million compared to a $235 million net loss a year ago. Hasbro said it achieved $40 million of net cost savings for the quarter and approximately $90 million year to date, putting the company on track to achieve its full-year savings goal.
- By segment, the company's Wizard of the Coast and digital gaming revenue grew 20% year over year to $452 million. Entertainment revenue declined 90% to $18.8 million, or 30% excluding the eOne sale. Consumer products revenue declined 20% to nearly $525 million, resulting in a $9 million operating loss for the quarter. Hasbro attributed the decline to business exits, reduced closeouts and entertainment timing.
Dive Insight:
CEO Chris Cocks said during a Thursday earnings call that Hasbro’s performance on consumer products landed within expectations and that the company is becoming more profitable and improving operations.
The earnings came as rival Mattel reported on Tuesday that its net sales slipped 0.7% to $1.1 billion, while its net income for Q2 rose to $56.9 million. Mattel declined to comment earlier this week on speculation from Reuters that private equity firm L Catteron is interested in a takeover. That publication also reported that Hasbro was discussing whether to submit an offer.
Hasbro executives did not mention that possibility on the call, but focused on the company’s own turnaround efforts. To that end, Cocks said digital is a big part of the company’s growth and the industry’s growth overall.
“As we look at the business of play, it’s clear that digital is here to stay and a bigger factor than ever in how successful toy and game companies will grow and strengthen their brands,” Cocks said on an earnings call. Although the company is “still in the middle of the long game on our turnaround efforts on toys, we’re seeing signs our innovation is working, particularly where we have a big head start versus the competition.”
Cocks said the company embraces older consumers, whom the industry dubs “kidults.” Cocks said over 60% of Hasbro’s revenue is driven by consumers 13 years old and up, “and we will continue to lean in here as we think about innovation across our product portfolio.”
Hasbro raised its full-year guidance Thursday. The company now expects revenue for its consumer products segment to decline 7% to 11%, slightly better than its previous guidance of 7% to 12%, while Wizards of the Coast segment revenue is expected to decline 1% to 3%, an improvement from previous guidance of 3% to 5%. The company maintained its expectation to reach a gross savings target of $750 million by the end of 2025.
“While we still have more than half the year left from a revenue contribution standpoint, we’re doing a lot of the right things and are confident from where we sit today to take up our full-year guidance,” Chief Financial Officer Gina Goetter said.
Hasbro has also made several recent leadership changes. Last week, the company named John Hight president of Wizards of the Coast and Digital Gaming. He replaces Cynthia Williams, who resigned in April. Earlier this month, Hasbro named Dan Shull chief digital information officer, while Stephanie Beal was named chief supply chain officer.
