Sign in

    Hasbro Inc (HAS)

    Business Description

    Hasbro, Inc. is a global company engaged in the development, marketing, licensing, and sale of toys, games, and entertainment content . The company operates through four main segments, focusing on consumer products, digital gaming, and entertainment . Hasbro sells a wide range of products, including toys, games, and entertainment content, with significant contributions from its Consumer Products and Wizards of the Coast and Digital Gaming segments .

    1. Consumer Products - Sources, markets, and sells toy and game products worldwide, significantly contributing to the company's revenue. Includes out-licensing of trademarks and intellectual property rights for branded consumer products like toys and apparel .

    2. Wizards of the Coast and Digital Gaming - Focuses on trading card, role-playing, and digital game experiences based on Hasbro and Wizards of the Coast properties. Notable brands include MAGIC: THE GATHERING and DUNGEONS & DRAGONS, with MAGIC: THE GATHERING being particularly profitable .

    3. Entertainment - Develops and produces Hasbro-branded entertainment content, including film, television, and digital content. Involves licensing intellectual property for use in various entertainment formats .

    4. Corporate and Other - Provides management and administrative services to the company's principal segments and includes unallocated corporate expenses .

    Q3 2024 Summary

    Initial Price$58.44June 29, 2024
    Final Price$72.10September 29, 2024
    Price Change$13.66
    % Change+23.37%

    What went well

    • Monopoly Go! continues to generate steady revenue of approximately $10 million per month for Hasbro, with healthy user acquisition rates and strong engagement, signaling sustained success in digital gaming and IP licensing.
    • MAGIC: THE GATHERING has outperformed expectations, posting growth driven by successful releases with both analog and digital formats showing strength, reinforcing confidence in the brand's long-term health and future growth prospects.
    • Hasbro's strategic shift towards higher-margin products and partnerships, along with operational improvements, is enhancing profitability, evidenced by strong Consumer Products margins and expectations of continued improvement in sell-through due to better product positioning and retail alignment.

    What went wrong

    • Hasbro lowered its Consumer Products revenue guidance, citing approximately $100 million reduction due to lower closeout volumes, softness in entertainment-backed brands like Star Wars, and execution issues transitioning to a leaner inventory structure. This indicates potential revenue declines in Q4.
    • Year-to-date point-of-sale (POS) for Hasbro is down high single digits, excluding divested brands, which is worse than the overall toy industry decline of low single digits, suggesting Hasbro is underperforming the market.
    • Downloads of Monopoly Go! have continued to decline significantly, as highlighted by analysts, raising concerns about the sustainability of its revenue contributions, despite management's expectation of approximately $10 million in monthly royalty revenue.

    Q&A Summary

    1. Monopoly Go! Revenue Outlook
      Q: Is the $10M/month royalty revenue from Monopoly Go! sustainable?
      A: Management expects $10 million per month in royalty revenue from Monopoly Go! to remain steady for many months to come. They see healthy user acquisition rates, strong engagement, and successful initiatives like Tycoon Club, which could even increase revenue. They anticipate Monopoly Go! in 2025 to be flat to up versus 2024.

    2. Wizards of the Coast Revenue Decline
      Q: Why is Wizards' Q4 revenue and margin expected to decline?
      A: The decline is due to MAGIC set timing, specifically not having a comparable Lord of the Rings holiday set in Q4 this year. This absence impacts both revenue and margins due to volume deleverage. Additionally, the timing of January sets affects when revenue is recognized.

    3. Consumer Products Guidance Reduction
      Q: What caused the reduction in Consumer Products guidance?
      A: The guidance reduction of about $100 million is due to lower closeout volumes (about half), underperformance in entertainment-backed brands like Star Wars (30–40%), and challenges from leaner inventory structures. Despite this, POS expectations haven't materially changed.

    4. Impact of Exited Brands
      Q: How did exited brands impact results, and what's expected ahead?
      A: Exited brands negatively impacted revenue by about $25 million in both Q3 and expected similarly in Q4. Next year, they expect to earn healthier royalties from these outsourced brands, surpassing previous operating margins.

    5. MAGIC Revenue Outlook
      Q: Will MAGIC revenue decline this year despite recent outperformance?
      A: Yes, MAGIC is expected to decline due to the lack of a holiday set comparable to last year's Lord of the Rings release. While MAGIC outperformed in the first three quarters, set timing affects the full-year outlook.

    6. Baldur's Gate 3 Performance
      Q: How will Baldur's Gate 3 continue to contribute financially?
      A: Baldur's Gate 3 exceeded expectations, contributing about $35 million this year. While not expected to remain at this level, management anticipates continued revenue for several years due to strong partnership with Larian and ongoing community engagement.

    7. POS Trends and Holiday Outlook
      Q: What's the POS trend and holiday expectation?
      A: Year-to-date POS is down high single digits excluding divested brands. The toy industry, excluding building blocks, is down 2% to 5%, and this trend is expected to continue through the holiday season.

    8. Cost Savings Opportunities
      Q: What are the remaining cost savings opportunities?
      A: Next year's cost savings will be balanced between supply chain (about 50%) and managed expenses. Initiatives include design-to-value savings and refining supplier and logistics networks.

    9. Holiday Season Expectations
      Q: How is retailer sentiment ahead of the holidays?
      A: Retailer sentiment remains supportive and unchanged. Management is excited about brands like Play-Doh, Beyblade X, Transformers, Marvel, and their board game portfolio for the fourth quarter.

    10. Future of MAGIC and Marvel Collaboration
      Q: What's the outlook for the upcoming MAGIC Marvel releases?
      A: Upcoming Marvel Secret Lair drops are expected to generate low to mid-single-digit millions per release. A major Spider-Man set is planned for the second half of next year, with more collaborations over the next 4–5 years. Management sees a bright future for MAGIC, contributing to top-line growth in 2025.

    11. Relationship with Scopely
      Q: How is Hasbro's relationship with Scopely evolving?
      A: Hasbro values Scopely as a strong partner in mobile gaming. They collaborate on games like Yahtzee, Scrabble, and Monopoly Go!, and are open to future projects leveraging Hasbro's IP. Scopely's innovations, such as Tycoon Club and in-game events, enhance player engagement and can increase Hasbro's royalty revenue.

    Key Metrics

    View all financials →

    Executive Team

    NamePositionStart DateShort Bio
    Christian CocksChief Executive OfficerFebruary 25, 2022Christian Cocks has served as the Chief Executive Officer of Hasbro since February 25, 2022. Before becoming CEO, he was the President and Chief Operating Officer of Wizards of the Coast and Digital Gaming from 2021, and prior to that, he served as President of Wizards of the Coast since 2016. He joined Hasbro from Microsoft .
    Gina GoetterExecutive Vice President and Chief Financial OfficerMay 18, 2023Gina Goetter serves as the Executive Vice President and Chief Financial Officer at Hasbro, Inc. She was appointed to this position effective May 18, 2023. Before joining Hasbro, Ms. Goetter was the Chief Financial Officer at Harley Davidson, Inc. from 2020 to 2023 .
    Tim KilpinPresident, Toys, Licensing & EntertainmentApril 24, 2023Tim Kilpin serves as the President, Toys, Licensing & Entertainment at Hasbro. He was appointed to this position on April 24, 2023. Before joining Hasbro, Kilpin was the Executive Chairman and Chief Executive Officer of PlayMonster Group, LLC from 2020 to 2023 .
    Cynthia WilliamsPresident and Chief Operating Officer of Wizards of the Coast and Digital Gaming2022Cynthia Williams has been serving as the President and Chief Operating Officer of Wizards of the Coast and Digital Gaming at Hasbro since 2022. Before joining Hasbro, she worked at Microsoft from 2018 to 2022 .
    Najuma AtkinsonChief People Officer2022Najuma Atkinson serves as the Chief People Officer at Hasbro, a position she has held since 2022. Before joining Hasbro, she worked at Dell Technologies .
    Matthew AustinChief Revenue Officer2023Matthew Austin is the Chief Revenue Officer at Hasbro, having started in this role in 2023. Prior to this position, he served in various capacities at Hasbro, including as Chief Commercial Officer from 2022 to 2023 .
    Tarrant SibleyExecutive Vice President, Chief Legal Officer, and Secretary2019Tarrant Sibley is the Executive Vice President, Chief Legal Officer, and Secretary at Hasbro, Inc. He has been serving in this role since 2019 .
    Frank GibeauBoard Member, Member of Finance and Capital Allocation Committee, and Cybersecurity and Data Privacy CommitteesMarch 21, 2024Frank Gibeau joined the Board of Directors of Hasbro, Inc. on March 21, 2024. He serves as a member of the Finance and Capital Allocation Committee and the Cybersecurity and Data Privacy Committees .
    Darin HarrisBoard Member, Member of Audit Committee, and Nominating, Governance and Social Responsibility Committees2024Darin S. Harris has been a director at Hasbro since 2024. He serves on the Audit Committee and the Nominating, Governance and Social Responsibility Committee .
    Owen MahoneyBoard Member, Member of Audit Committee, and Finance and Capital Allocation Committee2024Owen Mahoney has been a director at Hasbro since 2024. He serves on the Audit Committee and the Finance and Capital Allocation Committee .

    Questions to Ask Management

    1. You mentioned that half of the Q4 revenue call-down in Consumer Products is due to closeout volume reductions, and another 30%-40% is associated with Entertainment-backed brands like Star Wars. Could you elaborate on how these factors will impact your ability to achieve growth in the Consumer Products segment moving forward, especially considering the reliance on licensed brands?

    2. Given the significant decline in discounted toy volume, down 70% year-to-date, how do you plan to offset this decrease with "good" toy volume, and what strategies are in place to drive flat to up sales in nondiscounted products during the holiday season?

    3. With MAGIC: The Gathering outperforming expectations in the first three quarters but facing a decline in Q4 due to set timing and the absence of a holiday set like last year's Lord of the Rings release, how confident are you in MAGIC's ability to return to growth in 2025, and what initiatives are planned to sustain its momentum?

    4. You indicated that supply chain savings accounted for 60% of your cost reductions this year, shifting to a 50-50 split between supply chain and managed expenses next year. Can you provide more specifics on where these additional supply chain efficiencies will come from, and how realistic is it to expect continued significant savings from these areas?

    5. As you transition to a leaner inventory structure, you mentioned experiencing "growing pains" and execution issues that affected revenues. What are the specific challenges you're facing in inventory management, and how are you addressing them to prevent similar impacts on future quarters?

    Share Repurchase Program

    Program DetailsProgram 1
    Approval DateMay 2018
    End Date/DurationNo expiration
    Total additional amount$500 million
    Remaining authorization$241.6 million
    DetailsIncrease shareholder value; repurchases can be made in the open market or through privately negotiated transactions

    Past Guidance

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: Q4 2024 and FY 2025
    • Guidance:
      1. Revenue Guidance: Lowered full-year revenue guidance for the Consumer Products segment due to lower closeout volumes and softness in action figures, particularly Star Wars .
      2. Monopoly Go! Revenue: Expected to generate approximately $10 million in licensing revenue per month .
      3. Operating Profit Margin: Aiming for close to 20% for the year, with a pullback in Q4 .
      4. Wizards of the Coast Revenue: Expected to be down in Q4 .
      5. Cost Savings: Continued focus on supply chain efficiencies and managed expenses .
      6. Consumer Products Revenue: Implies a mid-single-digit decline in Q4 .

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Wizards Revenue: Expected to be down 1% to 3% .
      2. MONOPOLY GO! Revenue: Anticipated to generate roughly $105 million for the full year .
      3. Baldur's Gate 3 Revenue: Expected to be roughly $30 million .
      4. Digital Licensing: Expected to be down in Q3, flat in Q4 .
      5. MAGIC: Some contraction expected in the second half .
      6. Wizards Operating Margin: Forecasted to be approximately 42% .
      7. Consumer Products Revenue: Expected to be down 7% to 11% .
      8. Consumer Products Adjusted Operating Margin: Maintained at 4% to 6% .
      9. Entertainment Revenue: Expected to be down approximately $15 million .
      10. Entertainment Adjusted Operating Margin: Expected to be roughly 60% .
      11. Cost Savings: On track for $750 million by 2025 .
      12. Adjusted EBITDA: Expected to be $975 million to $1.025 billion .
      13. Ending Cash: Expected to be similar to 2023 .

    Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Wizards Operating Margin: Expected to be between 38% and 40% .
      2. Consumer Products Revenue: Expected to decline by 7% to 12% .
      3. Total Hasbro EBITDA: Expected to be $925 million to $1 billion .
      4. Wizards Revenue: Expected to decline by 3% to 5% .
      5. Cost Savings: On track to deliver $200 million in 2024 .
      6. Inventory Levels: Expected to remain flat versus 2023 .
      7. Capital Allocation Priorities: Focus on core business investment and debt reduction .
      8. Consumer Products Margin: Expected to improve, aiming for double-digit margins by 2025 .
      9. Inflation Impact: Expected to see about 2 points of inflation .

    Q4 2023 Earnings Call

    • Issued Period: Q4 2023
    • Guided Period: FY 2024
    • Guidance:
      1. Wizards Revenue: Expected to decline by 3% to 5% .
      2. Consumer Products Revenue: Forecasted to be down 7% to 12% .
      3. Entertainment Revenue: Expected to be down approximately $15 million .
      4. Total Hasbro EBITDA: Forecasted to be $925 million to $1 billion .
      5. Cost Savings: Increased target to $750 million by 2025 .
      6. Capital Expenditure: Estimated to be approximately $225 million .
      7. Cash Position: Expected to be slightly down versus 2023 .
      8. Long-term Revenue Growth: Consumer Products to return to low single-digit growth, Wizards to mid- to high single-digit growth .

    Competitors

    Competitors mentioned in the company's latest 10K filing.

    • Large toy and game companies: Compete in product categories and offer private label products at lower prices .
    • Smaller United States and international toy and game designers, manufacturers, and marketers: Compete in product categories .
    • Digital gaming developers: Focus primarily on digital gaming products and services for gaming consoles, personal computers, and mobile devices .
    • Companies offering TV and film content and branded entertainment: Specific to children and their families .
    • Large retailers: Offer products under their own private labels, often at lower prices .
    • Major U.S. studios: Part of large, diversified corporate groups with in-house production and distribution capabilities .
    • Children's television networks: Compete with the Discovery Family Channel for viewers, advertising revenue, and distribution fees .
    • Technology companies: Makers of tablets, mobile devices, video games, and other digital gaming products and screens, and social media companies .