Q2 Games revenue rises 11 per cent for Hasbro but net revenue takes a dip

Hasbro has revealed net revenue for the second quarter of 2020 to be at $860.3 million, 29 per cent down from the $1.2bn it hit for the same period in 2019. The global toymaker has indicated that consumer demand for Hasbro products was hampered by store closures and product shortages brought on by lockdown measures in the fight against the Coronavirus pandemic.

Hasbro’s Gaming revenues, however, grew a firm 11 per cent, while gaming point of sale was up globally by over 50 per cent. The company’s classics, including Jenga, Connect 4, Battleship, Mousetrap, and Twister were all named among the top ten revenue increases in Q2.

The fly in the ointment was a supply chain disruption which led to in-stock levels below normal thresholds and limited shipments in the quarter, all of which brought on by the pandemic.

Hasbro also completed its acquisition of Entertainment One at the beginning of the first quarter 2020. While net loss for the second quarter 2020 was $33.9 million, that does include $8.5 million of acquisition-related expenses, $10.1 million of severance charges associated with cost-saving initiatives within its TV and Film business, and $17.9 million associated with the eOne acquisition.

“The global Hasbro team is executing our playbook amidst a dynamic and challenging environment. They are doing so with creativity and agility, identifying new and efficient ways to operate, capitalizing on our investments in creating a digital-first orientation while keeping our innovation engines moving and leveraging the expertise of a management team that has led through challenges in the past,” said Brian Goldner, Hasbro’s chairman and chief executive officer.

“The second quarter was much as we expected: strong point of sale for Hasbro brands countered by a very challenging revenue period due to global closures in our supply chain, across retailers as well as in entertainment production. We believe the outlook improves from here.”

Buoyed by noted patterns in consumer behaviour, Goldner remains optimistic of the company’s success throughout 2020, as well as the expected return on investments in ecommerce, entertainment, and digital gaming in coming years.

“Consumers – children, families, fans and audiences – are relying on Hasbro brands and stories to connect and entertain themselves throughout this period,” Goldner continued.

“While the full-year COVID-19 impact geographically remains unpredictable, as stores reopen and we begin to return to production for entertainment we expect the environment to improve in the third quarter and set us up to execute a good holiday season.

“Over the next few years, we are positioned to benefit from the investments we have made in ecomm, entertainment and digital gaming. We have a strong entertainment lineup for 2021, through internally developed as well as third-party entertainment. We will also begin to see a greater benefit of synergies from the acquisition of eOne as we remain on track to deliver against our plan of $130 million in synergies by year-end 2022.”

According to Deborah Thomas, Hasbro’s chief financial officer, the company is continuing to see improvement as stores across the globe reopen, stating that the company ‘is working closely with its customers to successfully navigate this period.’

The firm cites an increase in consumer demand for its products over the course of the second quarter, a charge led by its Gaming divison. Its global consumer point of sale increased by ‘high single digits’, including double digit gains in the US, UK, France, Italy, and Australia.

Shipments and point of sale remained strong for Hasbro’s products for Disney’s Frozen 2 and Lucasfilm’s Star Wars. Several other brands, including Play-Doh and NERF, had positive point of sale for the quarter.

Magic: The Gathering revenues declined as expected in the quarter, reflecting a difficult comparison with a major release in the second quarter of 2019 and the previously disclosed accelerated shipments into Q1 2020 to minimize disruption from COVID-19.

Digital revenues for Magic: The Gathering, including Arena, increased slightly in the quarter. Strong analog and digital releases are expected to support the brand in the second half of 2020.

Retail and supply

Nearly 30 per cent of global toy and game revenues came from online transaction during the second quarter. The toy firm has revealed that retailers and regions with developed ecomm businesses were better able to meet consumer demand, while retailers and countries which rely on physical stores, such as toy specialty retail and in Latin America, experienced greater difficulties.

As stores began to reopen late in the second quarter, shipments and point of sale improved. A trend which has continued into July.

Hasbro has noted that nearly all of its partner factories and warehouses are currently open and operating. Third-party factories in China represent approximately 55 per cent of the its manufacturing production. These factories have been operating at normal levels since early in the second quarter, are caught up on missed production and are picking up capacity from other locations closed during the second quarter.

From mid-March to mid-May, manufacturing production outside of China, namely in the US, Ireland and India, was shutdown. These locations are operating and anticipate catching up on missed production by the latter part of the third quarter 2020, assuming no major future shutdowns in production.

India production is continuing but there have been further lockdowns within the country in recent weeks.

About Robert Hutchins

Robert Hutchins is the editor of Licensing.biz and ToyNews. Hutchins has worked his way up from Staff Writer to the position of Editor across the two titles, having spent almost eight years with both ToyNews and Licensing.biz, and what now seems like a lifetime surrounded by toys. You can contact him by emailing robert.hutchins@biz-media.co.uk or calling him on 0203 143 8780 You can even follow him on Twitter @RobGHutchins if ranting is your thing...

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