Hasbro Q3 Earnings Slip

In its third quarter, Hasbro reported revenues of $1.68 billion, down 15 percent year-on-year, and an operating profit of $194.3 million, a 47 percent decline.

“As expected, the third quarter is our most difficult comparison and was further impacted by increasing price sensitivity for the average consumer,” said Chris Cocks, Hasbro’s CEO. “To achieve our full-year outlook, we are projecting Hasbro’s fourth-quarter revenue to be approximately flat versus last year on a constant currency basis with particular strength from our Wizards and digital gaming segment. Growth will be driven by what we expect to be one of the biggest fourth quarters for Magic: The Gathering as we kick off the brand’s 30th anniversary and celebrate Hasbro’s first-ever $1 billion brand.”

Cocks continued: “Hasbro is well positioned for growth in 2023 and beyond as we execute our new strategic plan focused on bigger brands, stronger profits and consumer-focused leadership. We are committed to an industry-leading dividend and a three-year program to drive $250 million to 300 million per year in cost savings, including $50 million in annualized run-rate for year-end 2022. We have a strong lineup of new products in Q4, and into next year, seven new blockbuster films and 20-plus streaming and TV shows that we are merchandising against, starting with November’s Marvel Studios’ Black Panther: Wakanda Forever and our Transformers: EarthSpark.”

Revenue from the entertainment segment decreased by 35 percent. Film and TV revenue was down 26 percent, reflecting the expected comparison to direct-to-streaming releases of the films Come from Away and Finch released in the prior period. Family Brands revenue declined 78 percent, primarily due to the delivery of My Little Pony: A New Generation film in third-quarter 2021, which did not have a comparable film release this year. Adjusted operating profit decreased 86 percent on lower revenues, in particular the decline in film revenue. Hasbro said that for the full year, it expects revenue to decline mid-single digits as it divests certain non-core businesses and some deliveries of scripted TV and film releases move to the first quarter of 2023. Adjusted operating profit is expected to be in line with or slightly up from last year’s adjusted operating profit margin.

Consumer products segment revenues decreased by 10 percent. For the full year, revenue is expected to decline by low-single digits from full-year 2021.

Wizards of the Coast and digital gaming segment revenues were down 16 percent, with high-single-digit revenue growth expected for the full year.

“In early October, we shared the results of our nine-month strategic review, including our plan to drive accelerated growth and profit over the next five years,” said Deborah Thomas, Hasbro’s chief financial officer. “Our work to deliver disciplined, high-return growth to drive long-term shareholder value is well underway. Our balance sheet remains strong and well-positioned to meet our objectives. We are focused on selling through inventory and managing our business to deliver to our 16 percent adjusted operating profit margin target and meet our long-term goals.”