Following yesterday’s news about ongoing organizational changes, Hasbro reported third-quarter earnings this morning.
The Rhode Island-based toy and game company said revenue was down 15% (9% excluding eOne) compared with the same period last year, with consumer products, including toys, down 10%. Wizards of the Coast and Digital Gaming slip 5% as games launched last year underperform Baldur’s Gate 3.
The company said its own inventories were down 39% from last year, with consumer goods inventories down 40% from the third quarter of 2023.
The strong performance of our games and licensing businesses in the third quarter underscored our strength in our two most profitable areas. Our key initiatives around digitalization, licensing and reinvigorated product innovation are bearing fruit.
—Chris Cocks, CEO, Hasbro
In the field of consumer products, Hasbro said that with the growth of “My Little Pony” licensed consumer product revenue, “Transformers”, “Beyblade” and “Phoebe” have also achieved growth.
During an earnings call this morning, Hasbro executives said the move was partly due to declines in NERF and Star Wars, which were particularly underperforming in September. This resulted in an adjustment to fourth quarter guidance. The action figure category has been plagued by overproduction and clearances in recent years—much of which has been moved to clearance channels, with products landing at Ollie’s and Ross Dress for Less—and has been repeatedly cited as a key area for future growth. Meanwhile, Play-Doh is said to be having its “best back-to-school season ever,” and outbound licensing programs are paying off, with 50% year-over-year growth for Littlest Pet Shop (Basic Fun!) and FurReal Friends (just Play). Additionally, the LEGO graphic Transformers Bumblebee was successfully included in LEGO’s “Adults Welcome” marketing campaign.
Wizards of the Coast and Digital Games segment revenue fell 5% compared to the Q3 release window as growth in Magic: The Gathering (3%) was offset by declines in Licensed and Digital Games. Baldur’s Gate 3 last year. Skopje’s Monopoly! It contributes US$10 million in licensing revenue to the company every month, reaching US$30 million in the third quarter alone.
Due to the divestment of eOne, entertainment business revenue fell sharply by 86%. Excluding eOne, revenue fell 17% due to the timing of delivery transactions. Operating profit was $10 million, compared with an operating loss of $469 million in last year’s third quarter.
Looking at the numbers:
Operating profit was $302 million, a margin of 23.6%, including $27 million in intangible amortization related to eOne and “costs related to the company’s transformation.” Adjusted operating profit was $329 million and adjusted operating margin was 25.7%, driven by favorable business mix, supply chain productivity and lower operating costs. The company has achieved net cost savings of $87 million and has saved approximately $177 million so far this year, aiming to meet its full-year savings target.
Reported diluted net income per share was $1.59 and adjusted net income per share was $1.73. The company paid $98 million in cash dividends to shareholders.
“We continue our turnaround efforts and are prepared to end the year with improved profitability, cash flow and operational rigor,” said Hasbro Chief Financial Officer Gina Goetter.
Through the first nine months of 2024, Hasbro’s overall revenue fell 18%. 7% growth in Wizards and Digital Games was offset by declines in Consumer Products (-16%) and Entertainment (-87%, or +1%, excluding the eOne divestiture).
Update Guide:
Hasbro has released updated guidance for 2024, which includes the following changes:
- Consumer products segment revenue will fall by 12% to 14%; adjusted operating margin will be 4% to 6%.
- Wizards of the Coast and digital game division revenue was flat to down 1%; operating profit margin was approximately 42%.
- Pro-Forma’s entertainment segment revenue fell by $15 million; adjusted operating profit margin was approximately 60%.
- Hasbro’s adjusted EBITDA totaled $975 million, reaching $1.025 billion.
- The total savings target is $750 million by the end of 2025.
Hasbro’s Q3 earnings report: Play-Doh, Transformers grow amid NERF decline, Star Wars appeared first on The Toy Book.
