The world’s largest toymaker said on Tuesday (April 27) that the pandemic-era digital shift saw its first-quarter eCommerce revenues grow 70 percent, while COVID-related shutdowns saw sales in its newly expanded TV, film and entertainment unit drop by 34 percent.
According to a Hasbro company statement, the Rhode Island-based toymaker said total revenues rose 1 percent for the quarter to $1.1 billion, while adjusted operating profits increased 15 percent to $174 million for the three months ending March 28.
“COVID continues to shift consumer shopping behaviors and is accelerating the shift to digital for Hasbro through our pure-play eCommerce retailers and omnichannel retailers as supported by their investments in technology and services like curbside pickup,” Hasbro CEO Brian Goldner told analysts and investors on the company’s earnings call.
At the same time, Goldner said the lockdown on TV and film production over the past year was temporary, and that a rebound in its eOne division — which it acquired for $4 billion in 2019 — is already starting to happen. “We’re really seeing an array of TV series that are in production for eOne as well as a number of films,” Goldner said, noting that he expects media deliveries to increase throughout the year. “In fact, by Q2, we expect to see the growth that we’ve been talking about, and our expectation for the full year remains the same, which is that the entertainment business should grow at double digits in revenue, and the return of television and film revenues to the levels that we saw back in 2019.”
Hasbro also said it currently has over 250 projects in development across film and TV.
New Reporting Segments
Hasbro said its Q1 results mark the launch of its new reporting segment structure, which it expects will provide a better view of its overall revenue, margin and cash generation from a portfolio that includes over 1,500 different brands, including Baby Alive, Monopoly, My Little Pony, Nerf, Play-Doh and Transformers.
Hasbro’s consumer products division — its largest unit, which accounted for almost two-thirds of total revenue for the quarter — saw sales rise 14 percent to $654 million. At the same time, the company’s digital gaming segment, led by its Wizards of the Coast production company, saw revenues rise 15 percent to $242 million, while its entertainment segment sales slumped to $218 million due to theater closures and delayed movie releases.
“As we said in February, we’re targeting operating margins that are in line with last year’s level of around 15 percent. Demand has been strong and that helps support it, but the impact of input cost increases has become more pronounced over the past several months, and we do have plans in place to help mitigate those costs — including price increases for the second half of the year,” CFO Deborah Thomas said on the call.
Within its largest segment, Thomas said European sales grew 20 percent and North American consumer product revenues rose 13 percent, while Asia and Latin America grew 11 and 6 percent, respectively.
No Change in Forecast
Prior to the results, Hasbro’s stock had risen about 37 percent over the past 12 months, lagging the S&P 500 but still raising its market value to more than $13 billion. “The Hasbro IPs (intellectual properties) are being actively developed, and the television and films are well under production. We do continue to use COVID protocols right now, and we believe those will dissipate as the situation continues to get better, but we feel very good about the entertainment business for 2021 and beyond,” Goldner said.
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