Wall Street rewarded Hasbro for cutting costs and reducing inventory in the run-up to 2024. Investors similarly signaled 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 shares rose more than 12% in midday trading following the company’s fourth-quarter and full-year earnings release and investor conference call.
Investors cheered even though Hasbro’s annual revenue fell 17%, or 7% when excluding the impact of the eOne Entertainment divestiture. But Hasbro beat adjusted earnings expectations for the fourth quarter and significantly improved its adjusted operating profit and adjusted operating margin for the full year.
Strategic plan called “Play to win”
The company also announced its new strategic plan, called “Play to Win”, which outlines the company’s growth plan for the next two years.
Hasbro’s successes in reducing costs and driving growth in key segments through 2024 “laid the groundwork” for the new strategic plan, Chief Executive Chris Cocks said.
“Play 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 explained: “growing 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 e-commerce; leveraging retail and licensing partnerships; and focusing on profitable, play-focused toy brands.
On the aging strategy, Cocks noted that “while we have powerful kids brands, over 60% of our audience is 13 years or older, which represents the lifelong fandom we create with consumers of all ages.”
The Hasbro’s collaboration with Mattel
Hasbro is also turning to partnerships with former toy rivals to boost sales, and yesterday announced a new one: a Play-Doh and Barbie collaboration with Mattel.
Hasbro’s popular Play-Doh brand has partnered with Mattel’s Barbie brand to create a line of toys where kids can use Play-Doh to create fashions for Barbie dolls.
“Play-Doh Barbie lets kids unleash their inner fashion designer, creating Play-Doh fashions with amazing ruffles, bows and realistic fabric textures,” said Cocks.
The new toy line will launch at Target in June and will be available at other retailers beginning in August.
Hasbro also announced a gaming partnership with Sabre Interactive.
The year 2024, which was a tough one for the industry overall, “played out as expected” for Hasbro, but the company emerged in a good position to pivot toward growth this year, said James Zahn, editor in chief of The Toy Book, following the earnings release.
“The company needed to be more agile, optimize its product assortment, clean up inventory pipelines and stop overproduction,” Zahn said. “It appears they have accomplished this with inventory returning to pre-pandemic levels,” he said.
Hasbro, Zahn said, plans to introduce a number of featured products at the annual New York Toy Fair, which opens March 1.
“Hasbro’s collaborative efforts are gaining momentum, as we’ve seen with today’s news that Hasbro and Mattel will be releasing a Barbie and Play-Doh collection. You can expect more from these toy titans in the coming months and collaborations with other licensing partners,” Zahn said.
Mattel, Hasbro competitor, also reaped the rewards when it announced its fourth-quarter results earlier this month, with its stock surging as much as 15% immediately following the results release. The stock has continued to climb since the results were released on February 4 and was up more than 20% by midday compared to pre-earnings levels.
