Hasbro (HAS): A few notable points on the new Playing to Win strategy

Shares of Hasbro, Inc. (NASDAQ: HAS) were down 2% on Friday. The stock has gained 8% over the past three months. The toy company delivered better-than-expected earnings results for the fourth quarter of 2024, and forecast slight revenue growth for fiscal year 2025. A key highlight of the earnings report was the company’s new strategy Playing to Win, which aims at driving growth through a focus on brands and partnerships.

Playing to Win

The Playing to Win strategy has five strategic building blocks. The first one is Profitable Franchises, which includes focusing on high-profit, high-growth areas across the brand portfolio. The company plans to drive growth across its portfolio through brand innovation and diversification.

The second block is Aging Up, which is focused on driving the play and collectible appeal for fans of all ages across the portfolio through toy brands as well as collectibles like action figures and cards. The third block is Everyone Plays, which involves expanding into other areas of opportunity such as fashion, dolls and girls’ collectibles as well as moving into emerging markets.

The fourth block is Digital & Direct, which involves building video games, services, and e-commerce capabilities. Around 70% of Hasbro’s revenue comes from categories such as games, digital, and licensing. The company has over a dozen projects in various stages of development alongside over 100 licensing partnerships.

The fifth block is Partner Scaled, which is driving growth through retail and licensing partnerships. This includes new toy collaborations, video game partnerships, AI-enabled games and toys, and new location-based entertainment investments. Hasbro expects to see over $4 billion in incremental partner-led investment over the next three years.

Q4 performance

In the fourth quarter of 2024, Hasbro’s revenues declined 15% year-over-year to $1.1 billion. Despite the decline, the top line managed to surpass estimates. Excluding the eOne divestiture, revenues were down 3%. Adjusted earnings per share was $0.46, up 21% YoY and above expectations.

Revenues in the Wizards of the Coast and Digital Gaming segment decreased 7%, mainly due to one fewer set release in the quarter. Revenue in the Consumer Products segment dropped 1% due to exited brands and reduced closeout volume. Entertainment segment revenues fell 91% in Q4.

Outlook

For the full year of 2025, Hasbro expects total revenue to be up slightly compared to the previous year on a constant currency basis. Revenue in the Wizards segment is expected to grow 5-7%, with anticipated strength in MAGIC driven by three Universes Beyond set releases. Based on the set timing, the company anticipates strong growth during the first and fourth quarters of the year. Licensed Digital Games is expected to be flat as contributions from a full year in Monopoly Go! offsets the moderation of Baldur’s Gate 3.

Consumer Products revenue is expected to be flat to down 4% for the year, with headwinds from NERF and Star Wars. Closeout volume is expected to be flat YoY while exited brands will not be a material headwind. Revenue in Q1 2025 is expected to be down mid-to-high single digits, mainly due to a late Easter. Revenue in the Entertainment segment is expected to be flat in FY2025.