Hasbro(US:HAS)2025-10-23 13:30Financial Data and Key Metrics Changes - Net revenue for Q3 was $1.4 billion, up 8% year-over-year, driven by double-digit growth in Wizards and steady execution across consumer products [10] - Adjusted operating profit increased 8% to $356 million, with an adjusted operating margin of 25.6%, holding steady despite increased cost pressure [10] - Year-to-date revenue is up 7% and adjusted operating profit has increased 14%, reflecting the strength of the diversified portfolio [10] Business Line Data and Key Metrics Changes - Wizards led performance with revenue growth of 42% to $572 million, with Magic revenue increasing 55% to $459 million [11] - Operating profit for Wizards rose 39% to $252 million, achieving a 44% operating margin [11] - Consumer Products revenue was down 7% year-over-year at $797 million, with an adjusted operating profit of $89 million and an 11.2% margin [12] Market Data and Key Metrics Changes - Retail shelf resets since late August led to a mid-single-digit point of sale (POS) increase entering the holiday season [8] - Retail inventories were down mid to high teens in the U.S. coming into Q4, but order books have accelerated compared to previous years [63] Company Strategy and Development Direction - The company is focused on a diversified, digitally forward strategy, with key drivers including Magic: The Gathering, Marvel, and Monopoly [4] - Plans for 2026 include original Magic: The Gathering IP sets and collaborations with popular franchises like Teenage Mutant Ninja Turtles and Star Trek [5] - The company is executing a tariff remediation playbook to mitigate risks and protect profitability, expecting $60 million of impact in 2025 due to tariffs [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining long-term growth through diversified digital initiatives and strategic partnerships [9] - The company raised its full-year guidance, expecting revenue growth in high single digits and adjusted operating profit growth exceeding 20% [16] - Management noted that the growth in Magic and sequential improvement in consumer products are fueling overall financial performance [11] Other Important Information - The company generated $490 million in operating cash flow and returned $294 million to shareholders via dividends [13] - The Board declared a quarterly dividend of $0.70 per share, consistent with capital allocation priorities [17] Q&A Session Summary Question: Q4 outlook and profitability by segment - Management expects modest revenue growth in Consumer Products, with Wizards anticipated to have a strong quarter due to upcoming releases [20][22] Question: Retail positive indicators and consumer behavior - Management noted that retail inventories were down, but POS momentum has accelerated, indicating a positive outlook for the holiday season [26][63] Question: Impact of tariffs on profitability - Tariff pressure in Q3 was approximately $20 million, with expectations of $60 million impact in 2025, but management is actively working to mitigate this [46][49] Question: Growth prospects for Magic: The Gathering - Management highlighted that the Universes Beyond strategy is driving new player engagement and sales, with expectations for continued growth [33][34] Question: Pricing strategy and consumer sensitivity - Pricing has been relatively muted, with a focus on maintaining price points under $20 to cater to consumer demand [36][39]