Hasbro said it is maintaining its updated outlook from this month’s investor day with 2022 sales expected to be flat to down slightly.
Hasbro has announced that it has fallen short of quarterly profit estimates. However, new chief executive officer Chris Cocks stated: “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.”
At the company’s first investor day under the leadership of Chris Cocks earlier this month, senior leaders from across the business unveiled the company’s new go-forward plan, which includes growing operating profit by 50% over the next three years, with plans to further expand operating profit margin to 20% by 2027.
At the time, Hasbro cut its annual sales forecast, warning that demand was beginning to wane ahead of the holiday season. It cited high inflation as a major factor, despite the usual resilience of toys among discretionary categories during economic downturns.
“As expected, the third quarter is our most difficult comparison and was further impacted by increasing price sensitivity for the average consumer,” commented Chris. He also stated that promotions “have become increasingly important” in driving product sales. The company reported high inventory, however claimed that its inventory should help it meet holiday demand.”
The Wizards of the Coast segment saw revenues decline 16%, however the Magic: The Gathering brand, which has grown into the company’s first $1b brand, is expected to benefit from a strong performance due to activity surrounding its 30th anniversary this Q4. The company is also gearing up for the 50th anniversary of Dungeons and Dragons in 2024.
Hasbro is expecting increased demand to accompany a slew of upcoming, high-profile releases, starting with Marvel’s Black Panther: Wakanda Forever and Transformers: EarthSpark, for which the company will produce a range of merchandise. “We have a strong line up of new products in Q4 and into next year, seven new blockbuster films and 20+ streaming and TV shows that we are merchandising against,” added Chris.
Hasbro has also been forced to deal with the impact of a strengthening US dollar, which negatively impacted the company’s third-quarter revenue by $53.7m, or 3%.
The company said it expects its 2022 sales to be flat to down slightly in constant currency, maintaining its updated outlook from earlier this month. Net revenue fell 15% to $1.68b in the third quarter ended September 25th, in line with analysts’ estimates.
Hasbro’s consumer products business reported a 10% fall in revenue, with a 28% fall in adjusted net earnings to $196.2m, or $1.42 per share, while analysts had expected the company to earn $1.52 per share.
“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 chief financial officer. “Our work to deliver disciplined, high-return growth to drive long-term shareholder value is well under way. 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% adjusted operating profit margin target and meet our long-term goals.”
