Hasbro Sales Down 15%, Profits Up As Turnaround Challenge Continues

Core Insights - Hasbro is experiencing challenges from a weak 2023, leading to excess inventory and a need to streamline its business by shedding less profitable segments [1][2] - The company reported a 15% decline in revenue for the third quarter, with the core toy segment down 10% and the Wizards of the Coast and Digital Gaming division also down 10% [1][2] - Despite the revenue decline, Hasbro posted earnings of $1.59 per share, a turnaround from a loss of $1.23 per share in the same quarter last year [2] Financial Performance - Revenue for the third quarter was $1.28 billion, slightly below expectations of $1.30 billion [2] - Excluding the impact of the divestiture of eOne, revenue would have declined by 9% instead of 15% [2] - The company’s stock fell nearly 6% following the earnings report [1] Strategic Initiatives - Hasbro is in a multi-year plan to shift its revenue mix towards games, digital, and intellectual property licensing, which are seen as the future of play [3] - The CEO noted improvements in margins, inventory levels, and cost structure, indicating progress in the turnaround plan [3] - Key initiatives in digital, licensing, and product innovation are starting to yield positive results [3] Product Performance - The Magic: The Gathering brand saw a 3% increase in revenue, and the Monopoly Go! digital game contributed $30 million during the quarter [5] - Sales of Transformers toys are expected to rise due to the recent Transformers movie, while Play-Doh is also performing well with a new product expected to be a holiday bestseller [5] Market Outlook - Analysts believe Hasbro is aware of the need to address declines in key categories like Star Wars and Nerf, and is taking steps to improve [6] - The holiday season may be challenging, but there is optimism for 2025 as the toy industry evolves [6][7] - Hasbro is seen as having the potential to turn challenges into opportunities despite facing significant hurdles [7]