Hasbro May Have A Bad 4th Quarter

CNN Business released an article about our favorite toymaker and according to CNN Business Hasbro “really, really needs you to buy ‘Frozen 2’ and ‘Star Wars’ toys this holiday season”. While the article goes in detail about Frozen merchandise, which shall not concern us here, it also talks at length about Star Wars toys and lack of sales and why it really needs to change this holiday season. So click through to learn more about what a toy industry analyst from BMO Capital Markets thinks about the state of Star Wars toys, the challenges this holiday season and why Baby Yoda could be a huge help!

Hasbro’s hope?

CNN Business talked with BMO Capital Markets toy industry analyst Garrick Johnson and he had this to say about the current state of Star Wars toys:

Sales of Star Wars toys have been underwhelming since the release of the divisive “Last Jedi” in December 2017, according to Johnson, who said a combination of “movie fatigue” and poor fan reception were to blame.

“If there was fatigue two years ago, there’s more fatigue now,” Johnson added. “However, the Mandalorian, the Baby Yoda, that’s generating a lot of interest and excitement. I know some the fans on the last episodic movie were very upset with the movie. There were people who really disliked that movie so much that they swore off all Star Wars ever again. I’ve heard that. … If Hasbro can get a product out for Baby Yoda, that will help.”

The fatigue Johnson is talking about here is certainly no general Star Wars fatigue, as is proven by The Mandalorian, but at best a sequel trilogy fatigue.

The article then reveals that there are indeed Baby Yoda toys coming, but not before 2020. So there will be nothing for the holiday season. Which may be a problem for Hasbro and their 4th quarter results. Because according to the article toy sales for the holiday season beginning in September have been very slow, so far.

A number of reasons are given why Hasbro’s 4th quarter may not be so great:

• sales of Hasbro’s own franchise brands (think NERF, Transformers, Monopoly etc) are expected to perform poorly now as well
• Thanksgiving comes very late this year and therefore the busiest part of the holiday shopping season has six fewer days in 2019
• because of the uncertainties involved with the ongoing trade war between China and the USA, most retailers have cut back on their toy sales this year

According to the article Hasbro’s hope is that Frozen 2 toys and The Rise of Skywalker toys will be huge hits. Frozen 2 certainly enjoyed a very successful opening weekend. But we have to see how that translates into toy sales. And concerning The Rise of Skywalker we don’t know yet how much of a success Triple Force Friday was this year. The absence of the cutest Star Wars character ever this holiday season will certainly cost Hasbro some money.

There’s one more thing: there’s reason to assume that the success of Star Wars toys this holiday season may have an impact on the future of the Star Wars license. It expires in a year from now and we haven’t heard any updates yet. Which is certainly not a good sign, because previously the license agreements were renewed years in advance, the last two times a renewal was announced three years before the then current agreement would have expired. Now we’re down to about 12 months. I expect we’ll get a statement from Disney and Hasbro in early 2020.
If the license will not be renewed then Disney will certainly wait with the announcement until The Rise of Skywalker has come and gone to avoid any negative press that may impact sales. And Hasbro may want to wait with their decision until they know if Star Wars toys can have a bright fugure again. I say The Mandalorian is a huge opportunity here, since the show is certainly extremely toyetic and loved by the core demographic who buys toys. Now all we need are all the Mandalorian toys we can get, not just Baby Yoda, but also a lot more action figures, vehicles and playsets!

Read the full CNN Business article here!

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