Dive Brief:
- Hasbro Inc.’s revenue fell 23% to about $1.29 billion during the fourth quarter, down from $1.68 billion a year ago. The company in a Tuesday earnings announcement posted a Q4 operating loss of $1.2 billion.
- For the full year, Hasbro’s revenue fell 15% to $5 billion from $5.9 billion a year earlier. The company saw an operating loss of $1.54 billion, including $1.3 billion of impairment charges related to divesting eOne, as well as nonrecurring inventory costs and royalty expenses.
- Hasbro's full-year outlook anticipates revenue for its consumer products segment will be down 7% to 12%. The company also raised its cost-cutting target to $750 million from its previous goal of $350 million to $400 million by the end of 2025.
Dive Insight:
Hasbro's Q4 results stand in stark contrast to Mattel, which reported net sales of $1.6 billion for Q4, up 16% from $1.4 billion a year ago. Mattel's full-year net sales were flat at $5.4 billion.
“While we landed within our revenue guidance, we did not see the holiday season pickup that we were hoping for,” CFO Gina Goetter said on a Tuesday earnings call, according to a Seeking Alpha transcript.
However, CEO Chris Cocks said in a statement that Hasbro is starting the new year with a healthier balance sheet, a leaner cost structure and the ability to invest in the business. Goetter echoed that sentiment.
“As we navigated the current environment, we took aggressive steps to optimize our inventory, reset the cost structure, and sharpen our portfolio focus on play with the eOne film and TV divestiture,” Goetter said.
Goetter said during a Tuesday earnings call that Hasbro took three actions to help improve performance in 2023. First, it sold its eOne film and TV business to Lionsgate for $500 million and used the proceeds to reduce its debt by $400 million. The move will also result in annual interest expense savings of about $25 million. Second, the company accelerated its efforts to clear excess inventory, reducing its owned inventory by 51% versus last year. Inventory is now below pre-pandemic levels, Goetter said. Lastly, Hasbro in December said it planned to eliminate about 900 jobs in order to improve profitability and fuel long-term growth investments, Goetter said.
Another part of the company’s long-term revamp included eliminating half of its SKUs. Goetter said they represented just 2% of revenue and were duplicative and unprofitable for the company and retailers. Hasbro’s toy and game brand portfolio includes Dungeons & Dragons, GI Joe, Nerf, My Little Pony, and Transformers, which had a related movie release last year.
That movie, “Transformers: Rise of the Beasts,” drove point-of-sale growth of 35%, Cocks said. The company also plans to launch new products, promotions and content this year in celebration of the Transformers’ 40th anniversary.
However, full-year revenue for Hasbro’s entertainment segment fell 31%. The company said that was due to last year’s Hollywood writers’ and actors’ strikes. Revenue in its consumer products segment fell 19% for the year due to category trends, business exits and inventory management. Hasbro did report full-year growth for its Transformers and G.I. Joe properties. It also relaunched its Furby property last year. The Wizards of the Coast and digital gaming segment was up, rising 10% and driven by an increase in revenue from licensed digital gaming through titles like Baldur’s Gate III and Monopoly Go.
