Consumer Discretionary
Leisure
$7.94B
6K
Hasbro, Inc., together with its subsidiaries, operates as a toy and game company in the United States, Europe, Canada, Mexico, Latin America, Australia, China, and Hong Kong. The company operates through Consumer Products; Wizards of the Coast and Digital Gaming; Entertainment; and Corporate and Other segments. The Consumer Products segment engages in the sourcing, marketing, and sale of toy and game products. This segment also promotes its brands through the out-licensing of trademarks, characters, and other brand and intellectual property rights to third parties through the sale of branded consumer products, such as toys and apparel. Its toys and games include action figures, arts and crafts and creative play products, dolls, play sets, preschool toys, plush products, sports action blasters and accessories, vehicles and toy-related specialty products, games, and other consumer products; and licensed products, such as apparel, publishing products, home goods and electronics, and toy products. The Wizards of the Coast and Digital Gaming segment engages in the promotion of its brands through the development of trading cards, role-playing, and digital game experiences based on Hasbro and Wizards of the Coast games. The Entertainment segment engages in the development, production, and sale of entertainment content, including film, television, children’s programming, digital content, and live entertainment. The company sells its products to retailers, distributors, wholesalers, discount stores, specialty hobby stores, drug stores, mail order houses, catalog stores, department stores, and other traditional retailers, as well as e-commerce retailers; and directly to customers through its e-commerce websites under the MAGIC: THE GATHERING, Hasbro Gaming, PLAY-DOH, NERF, TRANSFORMERS, DUNGEONS & DRAGONS, PEPPA PIG, and other brand names. Hasbro, Inc. was founded in 1923 and is headquartered in Pawtucket, Rhode Island.
Key insights and themes extracted from this filing
Consolidated net revenues decreased to $4,135.5 million from $5,003.3 million, primarily driven by a $579.0 million decline in the Entertainment segment due to the sale of eOne Film and TV business. This indicates a significant impact from strategic divestitures.
The Wizards of the Coast and Digital Gaming segment experienced a net revenue increase of 4%, reaching $1,511.3 million compared to $1,457.6 million in the previous year. This growth partially offsets declines in other segments.
The company achieved an operating profit of $690.0 million, a substantial improvement compared to an operating loss of $1,538.8 million in the previous year. This indicates successful cost-saving initiatives and strategic realignments.
The divestiture of eOne Film and TV, which reduced content spend by over 90%, indicates a focused strategy on play-centric brands. This aligns with the stated goal of returning 'play' to the center of the mission.
The company is focusing on five key strategic building blocks: Profitable Franchises, Aging Up, Everyone Plays, Digital and Direct, and Partner Scale. These initiatives are designed to significantly extend consumer reach and drive for revenue and profit growth.
The company is adopting artificial intelligence (AI) and digital solutions to innovate, improve operational efficiency, and go to market digitally. This could lead to new product development and increased efficiency in operations.
The Operational Excellence program has delivered approximately $600 million of gross cost savings and $320 million of net cost savings since its initiation in 2022. This demonstrates successful execution of cost-saving initiatives.
The addition of Frank Gibeau, Darin Harris, and Owen Mahoney to the Board of Directors brings significant executive and operational leadership expertise. The appointment of John Hight as President of Wizards of the Coast and Digital Gaming further strengthens the leadership team.
The Company is currently evaluating options to relocate its corporate headquarters given the age and condition of the current building in Pawtucket, Rhode Island. This may indicate a need to improve facilities and create a more modern work environment.
The company acknowledges the increasing frequency, sophistication, and intensity of cyber-attacks, highlighting the potential for compromised electronic data to harm the business. This is a significant risk factor for a company relying heavily on digital operations and intellectual property.
The company acknowledges the risk of tariffs, including reciprocal or retaliatory tariffs, which could increase product costs, impact consumer spending, or lower revenues and earnings. This highlights the vulnerability to global trade policies.
The company relies on third-party manufacturers, with a majority located in China, Vietnam, India and Japan. This exposes the company to risks related to supply chain disruptions, political instability, and changes in labor costs.
The company acknowledges the highly competitive nature of the play industry, with low barriers to entry and increased competition from those using artificial intelligence to develop games, toys and content. This indicates a need for continuous innovation and adaptation.
The company acknowledges that consumer interests change quickly, making it difficult to design and develop innovative products, play patterns and entertainment offerings which are and will continue to be popular with children, families and audiences. Failure to correctly anticipate consumer interests will harm revenues and earnings.
The company possesses three competitive advantages: a broad and deep brand portfolio rooted in play; one of the biggest and most diverse licensing businesses in the world; and a profitable games business anchored by MAGIC: THE GATHERING, MONOPOLY, DUNGEONS & DRAGONS, and Hasbro gaming classics.
The company is continuing to refine its integrated supply chain from planning and designing to sourcing and delivering, with a multi-year plan to deliver improved capabilities and provide a productivity pipeline to fuel growth at Hasbro.
The company continues to execute on its Operational Excellence program, an ongoing enterprise-wide cost-savings initiative that includes targeted cost-savings, supply chain transformation and certain other restructuring actions designed to drive growth and enhance shareholder value.
The company is reducing complexity across the business, including significantly reducing SKU count, reducing owned inventory levels and reducing the cost structure. This should lead to improved efficiency and profitability.
Continued digital game development is a key growth factor for the future, including AAA games, games as a service and licensed games. The company has invested substantially in its digital gaming business and as a result it has seen significant growth over the past several years.
The pace of change in product offerings and consumer tastes in the electronics and digital gaming areas is potentially even greater than for other products and this pace of change is expected to accelerate as artificial intelligence is further incorporated into the development of games.
The company is adopting artificial intelligence (AI) and digital solutions to innovate, improve operational efficiency, and go to market digitally. This could lead to new product development and increased efficiency in operations.
There were no repurchases of the Company's Common Stock during 2024. The Company has no obligation to repurchase shares under this authorization. The timing, actual number and value of the shares that are repurchased, if any, will depend on a number of factors, including the price of the Company's stock and the Company's generation of, and uses for, cash.
In May 2024, the Company issued an aggregate of $500.0 million of senior unsecured debt securities that bears a fixed interest of 6.05% due 2034 (the '2034 Notes'). Proceeds from the 2034 Notes, along with existing cash available, were utilized to repay the aggregate of $500.0 million of 3.00% Notes Due 2024
We expect total cash capital expenditures in fiscal year 2025 to be between $225 million and $250 million. We expect to fund our capital expenditures with available cash or cash generated from operations.
ESG governance starts with our Board of Directors ('Board'), with specific oversight by our Nominating, Governance and Social Responsibility Committee of the Board ('Governance Committee'). ESG topics, such as climate and sustainability, human rights and ethical sourcing, are regular agenda items at Governance Committee meetings.
The Science-Based Targets Initiative ('SBTi') has validated our greenhouse gas ('GHG') emission reductions targets. This demonstrates a commitment to environmental sustainability.
Our Human Rights and Ethical Sourcing program launched over 30 years ago and is dedicated to ensuring that facilities involved in the production of our toys, games and licensed consumer products comply with Hasbro's Global Business Ethics Principles.
The principal market for the Company's toys and games and licensed consumer products is the retail sector. Revenues from the Company's top five retail customers, accounted for approximately 36% of its consolidated net revenues in 2024.
The Company's revenue pattern continues to show the second half of the year to be more significant to its overall business for the full year. In 2024 approximately 58% of the Company's full year net revenues were recognized in the second half of the year.
The impact of inflation on the Company's business operations was significant during 2024. The Company monitors the impact of inflation to its business operations on an ongoing basis and may need to implement actions such as price adjustments to mitigate the impact of changes to the rate of inflation in future periods.