Honey, I Shrunk The Company! The Hasbro Q4/2024 Earnings Report!
Earlier today Hasbro released their numbers for Q4 2024 and also for the full year. As expected Chris Cocks is full of praise for himself and Hasbro and sees the company on the right path. He wants to transform Hasbro into more of a games company, not really toys anymore, they also want to go more into (digital) gaming, no surprise, with how successful the licensed D&D title Baldur’s Gate 3 was and how much money on the phone Monopoly Go! is making for them. And Cocks even announced a new strategy “playing to win!”. One aspect of this new strategy is to appeal to kids ages 13+, of course Hasbro feels the effects of the smartphone and video gaming, and the cut off age for certain toys is getting ever lower. This is where games and the entire Wizards of the Coast branch are supposed to succeed. And yes, for the full year Wizards grew again, while consumer products (aka “toys”) revenue greatly declined by 12% for the full year.
Revenue overall declined by 17% for the full year, much of that can be attributed to the sale of eOne (Hasbro got rid of their entertainment branch), but even without that revenue still declined 7%. Total earnings for 2024 were $4.1 billion, vs $5 billion in 2023. But profitability is up, operating margins are pretty good and Hasbro owned inventory (aka unsold stuff languishing in a warehouse) is also greatly reduced.
What do I hear you say? Star Wars? What about Star Wars? Click through to find out…
UPDATE: now with earnings call transcript and a few insightful words about Star Wars from Hasbro (nothing positive)
Getting smaller year after year…
I will spoil it right now: Star Wars was not mentioned once.
In the PDF presentation Hasbro has a slide about “Growth Brands”… and Marvel is on it. Star Wars is not. That says it all.
In the presentation Hasbro has very few words to say about Partner Brands…. but they do mention the brands that grew for them in 2024 (and Q4), things like Beyblade, Transformers and Marvel.
Partner Brands revenue in Q4 grew a little compared to Q4/2023, maybe the worst is behind Hasbro. But Star Wars did not contribute to this growth at all, we know from the previous report that Star Wars is declining, so much so that Hasbro singled out Star Wars in their earnings call several times, mentioning how sales declined. With the usual excuses.
Here is the updated chart for Partner Brands revenue:
Click to enlarge
$181 million in Q4/2024 is still the second worst result ever for Hasbro in recent history (at least ever since numbers for the Partner Brands category have been available, after the restructuring of the company). In fact, in all of 2024 Hasbro’s total Partner Brands revenue was just $583.4 million. Mere 5 years before, in 2019, total revenue was $1.22 billion. A decline of more than 52%. In fact, Hasbro’s total revenue used to be $6+ billion not too long ago. It’s only 2/3 of that now.
Mattel meanwhile reported $5.38 billion revenue, a decline of 1.13%. Hasbro, for a while, was ahead of its longtime US rival, but Mattel is once again the #1 American toy company, quite comfortably so even. LEGO from Denmark and Bandai/Namco from Japan are both bigger though.
The overall toy market in the US was stagnating in 2024, according to Circana, with sales declining mere 0.3%, it’s a similar story for the global toy market, which was also flat, with sales declining mere 0.6%. Hasbro is underperforming so to speak, with revenue decline of 7% (without the eOne sale that would always impact revenue).
But while traditional toys are floundering Hasbro is on its way to become a games company, Magic The Gathering and all things associated as well as games (and all things digital) do really well for them. Gaming, with MTG included, now accounts for about 50% of all revenue for the company. In 2024 Cocks remarked how he sees Hasbro becoming much more of a games company. And to be honest, this is probably the only way forward for the company. Traditional toys are on the way out or at least not as much of a factor anymore. Also, the margins for the MTG/Games segment are just fantastic, for 2024 operating margin was 41.8%. As I said previously, printing pretty pictures on pieces of cardboards is not that expensive. And digital has very low logistics costs, no shipping is required, you do not need to pay a factory. Monopoly Go! alone earned Hasbro $112 million in 2024.
Toy sales however keep free falling and adjusted operating margin is a measly 6%. Compared to the 41.8% for the games segment this is woeful. But toys has always been a low margin business. Which is why Cocks is shifting the company to games and digital. For the full year consumer products (aka toys) revenue declined by 22% in Europe, 9% in the US and 22% again in Latin America, only Asia saw some growth, but revenue in Asia is pretty low compared to the other regions.
Hasbro is still the market leader in the action figure segment with a total market share of 23.4% for the full year. A decline of 2 points however.
All in all Hasbro is profitable ($690 million operating profit for 2024), the company is making money, shareholders get their dividends and their share price is up after the earnings call earlier today.
Star Wars keeps circling the drain however and everything now depends on the Mandalorian movie, can it turn things around for merchandise sales in 2026? No improvements are to be expected for Star Wars in 2025, Andor, regardless of how it will do on Disney+, will not move any toys. And since Andor is the only high profile content this year this means there’ll be no support by entertainment.
I do wonder if Hasbro (or more like, Disney) will want to “celebrate” the tenth year anniversary of The Force Awakens, probably not though. Yes, it’s already almost been a decade now that JJ Abrams (and also Rian Johnson, let’s not forget him) ruined Star Wars after already ruining Star Trek.
– Hasbro Earnings Report
– Hasbro Earnings Presentation (PDF)
No earnings call transcript is available yet, I will add a link and maybe expand the article as soon as one is available and if anything is said about Star Wars in the call.
UPDATE:
The earnings call transcript is now available and Hasbro had a few things to say about Star Wars.
[…]if you look at the couple of businesses that we called out in our prepared remarks, that are impacting the guide but also really impacted our Q4 performance. Our Star Wars and then in NERF.
Consumer Products revenue was down 12% as growth in our licensed Consumer Products business was more than offset by exited brands, reduced closeouts and softer volume, namely across NERF and Star Wars.
Consumer Products revenue will be flat to down 4%. This includes a roughly four-point headwind from two businesses: NERF, due to the structural category declines and Star Wars on the back of a light entertainment slate.
But the share — we’ll have share gains in many categories, but we’ll continue to be challenged with Star Wars and NERF.
There you have it. Hasbro officially confirms that Star Wars does not sell and neither do they believe this is going to change any time soon, in fact, they feel they will be “challenged” with Star Wars going forward. Earliest time this could change, maybe, is when the Mandalorian movie will be released in May 2026.
Just a guess… I feel the future of Star Wars at Hasbro could be in doubt after the 50th anniversary in 2027. If things do not change for the better. It seems the Golden Goose has stopped laying eggs.
– Earnings Call Transcript (The Motley Fool)
 |
|
|
Related Links
Category: Hasbro
Previous Article: Droid Factory R2-BNE In Stock At Disneystore.com
Next Article: The Sad State Of Star Wars On Disney+
|
|
|
|
|
|
|
|
|
-Click HERE to return to the home page-
Toy Reviews