Dive Brief:
- Hasbro Inc.’s first-quarter revenue fell 24% to $757.3 million, down from about $1 billion last year. The company attributed the difference largely to selling its eOne film and TV business. Excluding eOne, revenue was down 9%, the company said Wednesday.
- By segment, Wizards of the Coast and digital gaming revenue rose 7%. Revenue for Hasbro’s consumer products fell 21% in Q1 due to industry trends and fewer closeout sales. Entertainment fell 85% with the sale of eOne; excluding that, Hasbro said revenue for the segment grew 65% thanks to Peppa Pig-related content.
- Operating profit for the quarter was $116.2 million, up more than 500% from last year, while adjusted operating profit was $148.6 million. Hasbro swung from a year-over-year net loss of $22 million to net earnings of $59 million for the first quarter.
Dive Insight:
Hasbro is starting the year with a healthier balance sheet, improved inventory position and a leaner cost structure, CEO Chris Cocks said during an earnings call. “In Q1, we saw tangible progress on our turnaround. Our revenue landed as expected, and our margins outperformed. While most of the year remains ahead of us, I’m glad to see the business is on a solid track,” Cocks said.
Rival Mattel on Tuesday reported net sales of $810 million, down 1% year over year, an operating loss of $36 million and a net loss of $28 million. The operating loss and net loss are improvements from $80 million and $78 million, respectively, from the prior year, Mattel said.
As part of its turnaround strategy, Hasbro is focused on what Cocks described as “high-profit partnerships that leverage great partners with iconic brands from our extensive IP volumes.” For example, Cocks said Hasbro’s Monopoly Go, which was developed in collaboration with game publisher Scopely, recently exceeded $2 billion in lifetime revenue and 150 million downloads, which broke records as the fastest-growing mobile game.
Hasbro began Q1 with toy inventory down over 50% from the previous year, and “thanks to our operational discipline and careful SKU management, we’re in a good position with our large retail partners as we work toward new product innovation, including Beyblade, Nerf and a refreshed lineup for Baby Alive,” Cocks said.
The company on Monday also announced a global licensing deal with Playmates Toys to produce and distribute Power Rangers products. Playmates plans to debut its first Power Rangers toy line in 2025. Under the agreement, Playmates will hold licensing rights to develop additional Power Rangers products, including action figures, plushes and vehicles. Hasbro retains entertainment rights and said it plans to promote the brand across its direct-to-consumer channels and as part of industry events like San Diego Comic Con.
Chief Financial Officer Gina Goetter said during the call that about half of the company’s revenue decline is due to actions taken to improve overall profitability, while the remainder is due to prevailing category trends. Goetter said Hasbro expects a similar decline in Q2 and the pace of the decline is likely to moderate in the third quarter. “However, we expect to see profitability improving as we move through the year as we build volume ahead of the holidays and we realize more of our net cost savings,” Goetter said.
Hasbro is maintaining its previous annual guidance. The company still anticipates revenue for its consumer products segment will be down 7% to 12% and it’s still targeting $750 million in cost savings by the end of 2025. The company expects to deliver $200 million to $250 million in cost savings this year.
Over the last year, Hasbro has taken several actions to improve performance and streamline operations. The company last December completed the sale of eOne to Lionsgate for $500 million. It used the proceeds of that sale to reduce its debt by $400 million. That same month, the company said it planned to cut about 1,100 jobs globally. Hasbro also recently cut half of its SKUs.
Hasbro is also set to see a leadership change. Last week, Cynthia Williams, president of Wizards of the Coast and Hasbro Gaming, announced her resignation after two years with Hasbro. She will leave the company on Friday.
