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    HASBRO (HAS)

    HAS Q2 2025: Final Fantasy Sells Out in 1 Day, Tariffs Cost $60M

    Reported on Jul 23, 2025 (Before Market Open)
    Pre-Earnings Price$77.57Last close (Jul 22, 2025)
    Post-Earnings Price$77.50Open (Jul 23, 2025)
    Price Change
    $-0.07(-0.09%)
    • Exceptional Product Demand & Operational Agility: The Final Fantasy set generated unprecedented demand—completing a run in one day versus six months for comparable releases—and production was ramped up four times pre-release, demonstrating both strong consumer interest and the company’s ability to quickly scale production.
    • Robust Growth in Organized Play: Organized play participation for Magic increased 40% year over year, indicating a rapidly expanding player base that can drive recurring sales through strong long-tail market performance.
    • Expanding International & Licensing Opportunities: Success in key markets like Japan—with Final Fantasy emerging as the second best-selling set and set to surpass previous bests—combined with an aggressive Universes Beyond strategy, underscores potential for further global expansion and enhanced revenue from attractive licensed IPs.
    • Tariff Headwinds and Margin Pressure: The company acknowledged ongoing tariff impact in Q2, with updated estimates at $60 million expense, and management expects this drag to worsen in the back half (up to about 2 percentage points on margins) if conditions remain unfavorable.
    • Weakening Consumer Products Segment: Q2 consumer products revenue declined by 16%, driven by cautious retailer inventory decisions and delayed orders. This slowdown, combined with a recent $1 billion goodwill impairment charge in the segment, highlights potential structural concerns that may persist if order timing and market softness continue.
    • Inventory Buildup Risks Coupled with FX and Tariff Costs: There was an observable increase in domestic inventory, partly attributed to the shift from direct imports. This buildup, along with $15 million of tariff-related costs on the balance sheet and FX headwinds, poses a risk to future margin performance if the excess inventory is not absorbed effectively over subsequent quarters.
    MetricYoY ChangeReason

    Total Revenue

    -1.5% (from $995.3M to $980.8M)

    Total Revenue declined by 1.5%, reflecting a mix of a notable slowdown in Consumer Products and Entertainment segments partially offset by growth in Wizards of the Coast and Digital Gaming, continuing some of the trends observed in previous periods where divergent segment performances balanced overall revenue.

    Consumer Products

    -15.6% (from $524.5M to $442.4M)

    Consumer Products revenue fell by 15.6%, driven by broader industry softness and a shift in product mix—with core brands like NERF, GI JOE, and PLAY-DOH underperforming—similar to earlier trends seen in prior quarters where declining sales and reduced promotional activity impacted overall figures.

    Wizards of the Coast and Digital Gaming

    +15.9% (from $452.0M to $522.4M)

    Wizards of the Coast and Digital Gaming grew by 15.9%, supported by strong digital licensing and tabletop performance (including franchises such as MAGIC: THE GATHERING and MONOPOLY GO!), echoing robust growth drivers observed in previous periods.

    Entertainment

    -14.9% (from $18.8M to $16.0M)

    Entertainment revenue declined by 14.9%, primarily due to timing issues with streaming renewals and lower deal activity, reflecting a continuation of challenges seen in prior periods where discrete timing factors led to lower realized revenue.

    North America

    -22.9% (from $306.1M to $236.0M)

    North America revenue dropped by 22.9%, underpinned by significant headwinds in Consumer Products—a trend consistent with previous declines driven by lower sales in key categories (such as NERF and TRANSFORMERS) and market challenges in the region.

    Latin America

    -26% (from $63.8M to $47.1M)

    Latin America revenue fell by 26%, reflecting the broader industry trends and lower consumer product performance that have also affected other regions, consistent with earlier period dynamics where market conditions led to significant declines.

    Europe

    +4.1% (from $92.0M to $95.7M)

    Europe revenue modestly increased by 4.1%, suggesting incremental gains possibly driven by improved licensing performance and a stabilization of the product mix, contrasting with broader declines seen elsewhere.

    Asia Pacific

    +1.6% (from $62.6M to $63.6M)

    Asia Pacific revenue experienced a slight improvement of 1.6%, reflecting regional stability and modest gains in consumer products, which aligns with generally subdued but steady performance as observed in previous periods.

    MetricPeriodPrevious GuidanceCurrent GuidanceChange

    Total Hasbro Revenue Growth

    FY 2025

    no prior guidance

    mid‑single digits

    no prior guidance

    Wizards of the Coast Revenue

    FY 2025

    raised significantly

    high 20% range

    no change

    Consumer Products Revenue

    FY 2025

    outlook remains unchanged

    decline 5% to 8%

    lowered

    Total Hasbro Operating Margin

    FY 2025

    no prior guidance

    22% to 23%

    no prior guidance

    Wizards Operating Margin

    FY 2025

    operating margin outlook was raised

    42% to 43%

    no change

    Consumer Products Operating Margin

    FY 2025

    expected to decline to mid‑single‑digit range if impact high

    4% to 6%

    no change

    Adjusted EBITDA

    FY 2025

    no prior guidance

    $1,170 million to $1,200 million

    no prior guidance

    Cost Savings

    FY 2025

    no prior guidance

    $175 million to $225 million

    no prior guidance

    Tariff Impact

    FY 2025

    no prior guidance

    $60 million (lower end of $60–$180 million range)

    no prior guidance

    Capital Allocation

    FY 2025

    no prior guidance

    Focus on investments, debt reduction and dividends

    no prior guidance

    MONOPOLY GO Revenue

    FY 2025

    no prior guidance

    $10 million per month

    no prior guidance

    Trade Policy Assumptions

    FY 2025

    no prior guidance

    Assumes no changes to current tariff rates

    no prior guidance

    Inventory and Retailer Guidance

    FY 2025

    no prior guidance

    Decisions closer to holiday resets; back‑half loaded inventory

    no prior guidance

    Q2 Revenue (Quarterly Phasing)

    Q2 2025

    no prior guidance

    Expected to be down due to order pattern changes and unfavorable comps with low single‑digit declines

    no prior guidance

    Q3 Revenue (Quarterly Phasing)

    Q3 2025

    no prior guidance

    Expected to be stronger with inventory moving back‑half

    no prior guidance

    Q4 Revenue (Quarterly Phasing)

    Q4 2025

    no prior guidance

    Expected to be stronger with inventory moving back‑half

    no prior guidance

    MetricPeriodGuidanceActualPerformance
    Total Q2 Revenue
    Q2 2025
    Expected to see low single-digit year-over-year declines
    980.8Vs 995.3(≈1.46% decline year over year)
    Met
    MONOPOLY GO
    Q2 2025
    ~$10 million per month for the balance of the year
    44.0Total in Q2 (≈$14.7 million per month)
    Beat
    TopicPrevious MentionsCurrent PeriodTrend

    Tariff Pressures

    Q1 2025 discussed scenarios with high tariff rates and structural cost impacts ( ); Q4 2024 focused on China tariffs and mitigation strategies ( )

    Q2 2025 noted a favorable tariff rate leading to an expense at the lower end ($60 million) and emphasized mitigation strategies ( )

    Tariff pressures remain a key risk, though sentiment improved slightly in Q2 with more favorable rates and tighter cost estimates.

    Consumer Products Performance & Retailer Disruptions

    Q1 2025 highlighted modest revenue declines and shifting order patterns ( ); Q4 2024 cited specific brand challenges and retailer inventory issues ( ); Q3 2024 discussed revenue guidance adjustments due to operational challenges ( )

    Q2 2025 revealed a sharper revenue decline (-16%) and noted delays in holiday inventory builds impacting revenue ( )

    Consistently challenging environment with worsening sentiment as retailer delays and order disruptions intensify the revenue pressures.

    Organized Play & High-Demand IP Launches

    Q1 2025 emphasized strong Magic growth and the Universes Beyond strategy ( ); Q3 2024 detailed expansions in Magic events and future collaborations ( ); Q4 2024 focused on record preorders and high expectations for Final Fantasy and Spider-Man ( )

    Q2 2025 reported record attendance at Magic events and strong performance of the Final Fantasy set, with impressive revenue milestones for Magic and organized play ( )

    Very positive sentiment with recurring strong performance and record engagement, reinforcing long‐term growth potential.

    International Expansion & Strategic Licensing

    Q1 2025 detailed extended licensing deals with Disney and an asset‐light approach ( ); Q4 2024 outlined emerging market focus and partnerships like PLAY-DOH Barbie ( ); Q3 2024 discussed international partnerships for My Little Pony and LEGO collaborations ( )

    Q2 2025 emphasized a strategic push into Japan as a “gold mine” and unveiled a multi-party casino gaming partnership ( )

    Expansion initiatives are intensifying with new geographic targets and diversified partnerships, positioning the company for substantial future growth.

    Operational Agility & Supply Chain Diversification

    Q1 2025 stressed accelerated sourcing diversification and expanding to new countries ( ); Q4 2024 highlighted streamlined inventory and cost efficiencies ( ); Q3 2024 noted lean inventories and supply chain cost improvements ( )

    Q2 2025 underlined agile team responses, proactive SKU rationalization, and diversified sourcing to mitigate retailer delays and tariff impacts ( )

    A consistent focus on agility and proactive supply chain measures continues, with active risk management around inventory and tariffs.

    Digital Gaming Growth & New Video Game Ventures

    Q1 2025 reported strong digital gaming growth and highlighted MONOPOLY GO! ( ); Q4 2024 emphasized robust performance from MONOPOLY GO!, Baldur’s Gate 3, and introduction of Exodus ( ); Q3 2024 shared solid licensing metrics and performance of Baldur’s Gate 3 ( )

    Q2 2025 showcased exceptional performance from MONOPOLY GO! along with announcements for new ventures like Exodus and D&D titles, driving further portfolio expansion ( )

    Digital gaming remains a robust growth driver with sustained strong performance and strategic new ventures, reinforcing its long-term significance.

    Margin Dynamics: Expansion vs Compression Risks

    Q1 2025 highlighted strong margin expansion via cost savings and transformation but cautioned on tariff risks ( ); Q4 2024 detailed significant cost savings and operational improvements contrasted with compression pressures from video game cost capitalization ( ); Q3 2024 pointed to improved profit margins but noted headwinds such as royalty expenses ( )

    Q2 2025 noted margin improvements driven by operational excellence while still facing compression risks from tariffs and retailer disruptions ( )

    Mixed sentiment as robust cost‐saving initiatives support margin expansion, yet persistent external pressures continue to pose risks to profitability.

    1. Final Fantasy Demand
      Q: How fast did demand exceed expectations?
      A: Management noted that Final Fantasy sold out in one day—a pace far exceeding previous sets (e.g., Lord of the Rings took six months)—after ramping production with four pre-release increases, leaving significant long tail demand.

    2. Midterm Outlook
      Q: Are targets too conservative after Q2?
      A: Despite strong Q2 performance, management reaffirmed midterm margin expansion targets while cautioning that upcoming tariff headwinds may dampen margins in the back half, so guidance remains unchanged.

    3. CP Guidance
      Q: Why lower CP guidance this year?
      A: CP revenue is expected to decline 5%-8% due to retailers shifting from direct imports to domestic fulfillment and postponing holiday orders, with normalization anticipated later as shelf resets occur.

    4. Inventory Build
      Q: What drove the inventory increase?
      A: The step-up in inventory resulted from a planned seasonal build, FX impacts, and about $15M of tariff-related costs, compounded by retailers pausing direct imports, though inventory flow is expected to normalize in Q3/Q4.

    5. International Growth
      Q: How did Final Fantasy perform in Japan?
      A: In Japan, Final Fantasy ranked as the second best-selling set—expected to soon top earlier records—underscoring a robust international growth strategy and potential for deeper market penetration.

    6. Consumer Pricing
      Q: Are tariffs driving prices higher?
      A: Management observed that toy prices have gradually begun to creep up due to tariffs, but the impact is slowly absorbed across SKUs, with mix adjustments expected as the pricing environment evolves.

    7. Player Growth
      Q: How healthy is the Magic player base?
      A: Organized play saw a 40% YoY uplift in unique players, highlighting strong new player entry and enduring engagement, though overall total metrics are still being refined.

    Research analysts covering HASBRO.