Wall Street rewarded Hasbro today for cutting costs and reducing inventory in 2024. Investors also signalled that they are optimistic about the toymaker’s latest game plan, which includes an emphasis on digital gaming and creating more products for teens and adults.
Hasbro’s stock was up more than 12% at midday, after the company’s fourth-quarter and full-year earnings release and conference call with investors.
Investors applauded even though Hasbro’s full year revenue was down 17%, or 7% excluding the impact of the eOne entertainment divestiture. But Hasbro beat expectations for fourth-quarter adjusted earnings, and significantly improved its full year adjusted operating profit and adjusted operating margin.
‘Playing to Win’ Strategic Plan
It also announced its newest strategic plan, this one called “Playing to Win”, which outlines the company’s blueprint for growth over the next two years.
Hasbro’s successess in cutting costs and driving growth in key segments in 2024 “set up the foundation” for the new strategic plan, CEO Chris Cocks said.
“Playing to Win focuses Hasbro on what has always made us great – play and partners,” Cocks said on the conference call. The strategy involves five “building blocks”, Cocks said: “aging up” the product mix to focus on fans ages 13 and up; expanding into new areas in girls and emerging markets; driving digital growth, both in gaming and direct-to-consumer ecommerce; leveraging retail and licensing partnership; and focusing on profitable, play-focused toy brands.
On the aging up strategy, Cocks noted that “while we have powerhouse brands for children, over 60% of our audience is 13 or older, representing the lifetime fandom we create with consumers of all ages.”
Licensing partnerships are the “rocket fuel” that will help Hasbro’s iconic brands “go supersonic”, Cocks said.
Partnering with Mattel
Hasbro is even turning to partnerships with former toy rivals to drive sales, and today announced a new one – a Play-Doh and Barbie collaboration with Mattel.
Hasbro’s popular Play-Doh modeling dough brand is partnering with Mattel brand Barbie to create a toy line where kids can use Play-Doh to create fashions for Barbie dolls.
“Play-Doh Barbie allows children to unlock their inner fashion designer, creating Play-Doh fashions with amazing ruffles, bows, and realistic fabric textures,” Cocks said.
The new line of toys will launch at Target in June and be sold at other retailers starting in August.
Hasbro also announced a video-game partnership with Sabre Interactive.
The 2024 year, which was a tough one for the industry overall, “played out as expected” for Hasbro, but the company exited it in a good position to pivot to growth this year, James Zahn, Editor-in-Chief of The Toy Book, said following the earnings release.
“The company needed to become more nimble, streamline its product assortment, clean up the inventory channels, and stop overproduction,” Zahn said. “It seems they’ve done this with inventory returning to pre-pandemic levels,” he said.
Hasbro, Zahn said, is set to debut a number of strong products at the annual Toy Fair in New York, which opens March 1.
Hasbro’s “collaborative efforts are gaining momentum, as we’ve seen with today’s news that Hasbro and Mattel are releasing a Barbie-Play-Doh collection. You can expect more from these toy titans in the months ahead and collaborations with other licensing partners,” Zahn said.
Hasbro competitor Mattel also was rewarded when it reported its fourth quarter results earlier this month, with its stock jumping by as much as 15% immediately after the earnings release. The stock has continued to climb since the Feb. 4 earnings release and was up more than 20% at midday, compared to pre-earnings levels,
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