What to look for when Hasbro (HAS) reports Q2 2024 earnings results

Shares of Hasbro Inc. (NASDAQ: HAS) dropped over 2% on Wednesday. The stock has gained 10% in the past three months. The toymaker is scheduled to report its second quarter 2024 earnings results on Thursday, July 25, before markets open. Here’s a look at what to expect from the earnings report:

Revenue

Analysts are projecting revenue of $943.5 million for Hasbro in Q2 2024. This compares to net revenue of $1.21 billion reported in Q2 2023. In Q1 2024, net revenue decreased 24% year-over-year to $757.3 million.

Earnings

The consensus estimate for EPS in Q2 2024 is $0.78. This compares to adjusted EPS of $0.49 reported in Q2 2023 and $0.61 reported in Q1 2024.

Points to note

The toy industry in general has been seeing a slump as inflationary pressures weighed on discretionary purchases. Hasbro has also faced challenges in this environment, with revenues in its Consumer Products business declining 21% last quarter.

The toymaker’s net revenue declined double-digits in Q1 as the decrease in Consumer Products offset increases in the Wizards of the Coast and Digital Gaming, and Entertainment segments. Revenue was also impacted by the divestiture of the eOne film and television business.

Revenues in Consumer Products were impacted by broader industry trends, exited businesses, and reduced close-out sales due to last year’s inventory clean-up. For the second quarter, Hasbro expects revenue decline in this segment to be similar to Q1.

Wizards of the Coast and Digital Gaming continue to do well, helped by growth in licensed digital gaming, and tabletop revenues. On its Q1 call, Hasbro said it expects contributions from Baldur’s Gate 3 to taper down as it moves through the year.

The Entertainment segment saw revenue decline last quarter due to the eOne divestiture. Excluding this, revenue increased 65%, driven by PEPPA PIG content.

Hasbro’s strategy of focusing on Fewer, Bigger, and Better is expected to yield benefits. The company is prioritizing franchises and focusing on driving growth through licensing. It has signed licensing agreements and entered into strategic partnerships, all of which are anticipated to yield meaningful profits going forward.