Games saw strong growth, but Hasbro’s Q2 results show disruption to the supply chain and TV/film production have hampered efforts elsewhere.
Hasbro, which this year completed its acquisition of Entertainment One (eOne), has issued its first combined company results for Q2 2020.
Net revenues for the second quarter 2020 were $860.3m versus $1.2b pro forma revenues in 2019, a decline of 29%. Hasbro says foreign exchange had a $15.8m negative impact on Q2 revenues, and that net loss for the second quarter 2020 was $33.9m versus pro forma net loss of $42.6m in 2019.
Games saw strong growth throughout the period, with gaming revenues up +11% despite temporary store closures and disruption to stock levels. The growth was led by classic family titles such as Jenga, Connect 4, Battleship, Twister and Mousetrap. Magic:The Gathering, one of Hasbro’s standout gaming titles, experienced an expected decline in Q2, as 2019 had benefited from a major new release.
A major shift to e-commerce as a result of the pandemic was reflected in online sales data for the period, with nearly 30% of global toy and game revenues being transacted online in the second quarter. Point of sale also performed well in Q2, increasing by high single-digits, including double-digit gains in the US, UK, France, Italy and Australia. Point of sale remained strong for Disney’s Frozen II and Lucasfilm’s Star Wars products, as well as Play-Doh and Nerf.
The halting of live-action film and TV production impacted the business; eOne pro forma revenues declined in the quarter. Shutdowns delayed the completion and delivery of productions and timing of revenues to both later in 2020 and into 2021, though animation production for Peppa Pig, PJ Masks and the My Little Pony feature film, slated for release next year, continued.
Ongoing closures and disruption in some regions continue to impact sales, though Hasbro says it is ‘managing the business to navigate through this difficult environment and remain nimble as the impacts of the pandemic remain’.
“The global Hasbro team is executing our playbook amidst a dynamic and challenging environment. They are doing so with creativity and agility, identifying new and efficient ways to operate, capitalising on our investments in creating a digital-first orientation while keeping our innovation engines moving and leveraging the expertise of a management team that has led through challenges in the past,” said Brian Goldner, Hasbro’s chairman and chief executive officer. “The second quarter was much as we expected: strong point of sale for Hasbro brands countered by a very challenging revenue period due to global closures in our supply chain, across retailers as well as in entertainment production. We believe the outlook improves from here. Consumers – children, families, fans and audiences – are relying on Hasbro brands and stories to connect and entertain themselves throughout this period. While the full-year Covid-19 impact geographically remains unpredictable, as stores reopen and we begin to return to production for entertainment we expect the environment to improve in the third quarter and set us up to execute a good holiday season.”