Results miss expectations
Category performance and trends
As stated on its quarterly conference call, Hasbro entered 2023 expecting a low single-digit decline for the toy category. However, market performance has been more challenging than expected. The company said that according to its internal POS system, total point of sale was down 8% through the third quarter.
In Q3, revenues increased 40% in the Wizards of the Coast and Digital Gaming segment, driven by strong growth in Digital and Licensed Gaming revenue fueled by Baldur’s Gate III and Monopoly Go! However, this was not enough to offset revenue declines in the Consumer Products and Entertainment segments.
Revenue decreased 18% in Consumer Products due to soft industry trends and planned business exits. Entertainment revenues fell 42% due to the impact of the writers’ and actors’ strike on film and TV revenue.
Hasbro continues to face headwinds and believes this holiday will be heavily reliant on deals. The toymaker is working on inventory management as well as creating reasonable deals for consumers. It is also picking up on its cost-saving efforts to drive margins.
Bleak outlook
Hasbro now expects total revenue to decline 13-15% in FY2023, mainly due to a softer toy outlook in Consumer Products. The company expects revenue in the Consumer Products segment to be down in the mid-to-high teens. Hasbro anticipates typical holiday order patterns to be impacted as retailers remain cautious on inventory positions.
The toy giant continues to expect high single-digit revenue growth for Wizards of the Coast and Digital Gaming on the back of strong gains from MAGIC: THE GATHERING and digital games. For the Entertainment segment, revenue is expected to decline 25-30%.