Hasbro (HAS -0.53%), a leading brand in toys and games, released its third-quarter earnings report on October 24, 2024. The company revealed a mixed quarter with total revenue reaching $1,281.3 million, down 15% from the previous year. Adjusted earnings per share (EPS) improved, hitting $1.73 compared to last year’s $1.64. Analysts and investors noted both the adjusted operating margin increase to 25.7% and the substantial revenue drop in its entertainment segment due to eOne divestiture. Overall, the quarter displayed operational strengths but highlighted areas needing attention.
| Metric | Q3 2024 Result | Q3 2023 Result | % Change |
|---|---|---|---|
| Total Revenue | $1,281.3 million | $1,503.4 million | -15% |
| Adjusted EPS | $1.73 | $1.64 | +5.5% |
| Adjusted Operating Profit | $329 million | $343 million | -4.1% |
| Entertainment Revenue | $17.2 million | $122.9 million | -86% |
Source: Analyst estimates for the quarter provided by FactSet.
Understanding Hasbro: Business Overview
Founded on creativity and play, Hasbro is a globally recognized brand in the creation and delivery of innovative entertainment experiences. The company's product portfolio features iconic brands such as Monopoly, Magic: The Gathering, and Nerf. Hasbro is constantly innovating, with a focus on integrating storytelling with consumer play experiences, reflected in its multifaceted approach through digital gaming and entertainment content.
In recent times, Hasbro has prioritized several strategic pillars under its Blueprint 2.0 initiative, aiming to drive growth by focusing on brand development, digital enhancement, and operational excellence. Key business focuses include expanding direct-to-consumer channels, bolstering its digital presence through platforms like D&D Beyond, and leveraging high-profile licensing deals with partners.
Quarterly Highlights: Insights and Developments
During the third quarter, Hasbro experienced varied performance across its segments. Total revenue declined 15% over the year, impacted by specific challenges across different areas. The Consumer Products segment saw a downturn of 10% as a result of reduced closeouts and volume weakness. Yet strategic improvements in supply chain operations helped increase the segment’s adjusted operating margin by 3.9 percentage points.
Meanwhile, the Wizards of the Coast and Digital Gaming segment reported a 5% revenue drop, stemming from declines in digital licensing and licensed games. Despite this, Magic: The Gathering achieved a 3% growth. Notably, the segment's profitability was hampered, with operating profit decreasing by 11%.
The Entertainment segment struggled significantly, posting an 86% revenue drop due to the eOne divestiture. However, the segment shifted to an operating profit, contrasting a loss from the previous year. This shift partly results from strategic refocusing on core areas and dealing with deal timing challenges.
In its strategic pipeline, Hasbro is executing cost-saving measures aiming for $750 million in gross savings by 2025. Part of this involves digital and consumer experiences, such as high-demand games like Monopoly Go! that have shown resilience in the market.
Looking Forward: Strategic Roadmap and Expectations
Looking ahead, Hasbro projects its full-year 2024 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to fall between $975 million and $1.025 billion. Anticipated declines of 12%-14% in the Consumer Products segment stress the importance of revitalizing product channels and enhancing brand offerings.
Investors should watch how Hasbro addresses consumer product declines and implements cost-saving initiatives. Monitoring future product launches and digital platform expansions will be crucial to understanding Hasbro's trajectory in an evolving market landscape. Further emphasis on operational efficiency and digital innovation is likely to remain pivotal to its strategic growth.
