The Hasbro Earnings Report For Q3/2024

Earlier today everyone’s most favorite toy company  – aka Hasbro – posted their numbers for the last quarter. Wall Street did not like it all that much, and shares dropped by several points following the report, even though Hasbro made money, they report an operating profit of $302 million.
But then again, revenue for the quarter is down 15% compared to the respective 2023 quarter, and year to date revenue is down 18% even. Hasbro becomes more and more Magic The Gathering, the Company. Wizards of the Coast and digital gaming keep Hasbro afloat. Consumer products revenue keeps declining however, i.e. classic toys. And what about Star Wars? For the first time in ages the brand does get a mention in the presentation and Hasbro even talked about Star Wars in the earnings call where they answer questions of analysts. Let’s just say it’s not pretty. Click through to learn more!

Spoiler…

Hasbro, aka Magic The Gathering: The Company, is becoming a card printing and digital games company. MTG accounts for roughly one third of the $1.28 billion revenue in the last quarter and for 60% of the $301.9 million operating profit.

While consumer products made money again, $121 million profit, Wizards of the Coast has a lovely 44.9% operating margin, compared to 14.1% for consumer products (aka toys, board games, NERF and action figures).

Hasbro keeps and keeps shrinking and there is no end in sight. Consumer products revenue declined yet again, by 16% in the past quarter. The outlook for Q4 is not too positive either, hence why Wall Street was not too happy about the results.

For the full year Hasbro now forecasts 4-6% operating margin for consumer products and a total decline of 12-14%.

Also, Hasbro paid $98 million in dividends to shareholders. I assume all the fired employees are happy they contributed to the wealth of rich people further increasing. “Excellent” indeed.

But on to the very thing that interests you the most: Star Wars. Nothing was said about Star Wars in recent reports, literally nothing, but for the fist time since almost forever Hasbro at least mentions the brand, both in the presentation and then even in the earnings call. And here they mention it even a couple of times.

Ok, first, let’s look at partner brands performance (all the licensed toys are in this segment) overall: $190.1 million. Down 18% compared to the 2023 quarter. You have to remember that Q3 is traditionally Hasbro’s strongest quarter, since retailers / etailers place their orders for the holiday season over the summer. So while on the consumer front the holiday season tends to see the most sales, for toy companies such as Hasbro the quarter just before is usually the best, because their customers are retailers.

And the Q3/2024 results are – by far – the worst numbers ever. No contest. It’s a disaster. Look at the chart where you can see how abysmally low partner brands revenue is in 2024:

Click to enlarge

All Q3 results are color coded green. The past quarter is even worse than the already abysmal Q3/2023. And the excuse that exited licenses impact the numbers is no longer valid. When Hasbro began to exit licenses those exited licenses accounted for about 50% of the decline. But this process is mostly finished by now and the decline in 2024 is mostly down to worse sales. For the entire consumer product segment (including action figures) lower sales volumes is by far the deciding factor, and Hasbro even has a nice chart for that in their presentation. So what we see now, the decline, is almost exclusively lower sales volume.

Q3 Partner brands revenue in 2024 is merely 54% of what is used to be just two years ago. This is an astounding decline of sales. Of course some exited licenses also impact the numbers here.

Also, Hasbro apparently felt compelled to tell it like it is for the first time in ages, maybe this is a dig at Lucasfilm/Disney, no one can say what is going on behind the scenes, but if Hasbro is not actually contemplating an exit they at the very least should think about a much, much more favorable deal for them. Because, and this is just sad, in 2024 Star Wars is more like a mill stone around Hasbro’s neck. What used to be an entertainment and toy aisle juggernaut has become a laughing stock and joke. Pitiful really. On all fronts. Shows, games, toys – nothing works anymore.

So maybe this is why Hasbro actually said something about Star Wars for a change in their earnings call. And I will quote verbatim:

Toy revenue softness was due in part to our decision to sell less closeout volume in favor of higher profitability, as well as incremental softness in action figures, particularly Star Wars. We view action figures as a long-term bet for the Company and a place Hasbro has special strength from preschoolers to kids to adult fans. So we are bullish about this segment’s eventual return to growth.

And

Continued softness in Nerf and action figures, particularly Star Wars, also contributed to the decline in the quarter.

Hasbro repeatedly talks about how Star Wars “particularly” contributes to the decline and “softer” sales. Nothing happens coincidentally and I believe this is Hasbro’s way of telling Lucasfilm publicly how fed up they are with them and their continued failure to produce anything a majority of fans like and something that in turn results in a successful toyline.

So maybe Hasbro just fired a shot across Lucasfilm’s bow, publicly. Because all this time Hasbro never said anything really about rapidly declining Star Wars toy sales, or only in passing, even though it was obvious. This time they singled out Star Wars (no other partner brand, not Marvel etc) and said it “particularly” contributes to the decline.

Perhaps Hasbro feels compelled to tell it like it is this year with the train wreck that is The Acolyte and the upcoming – almost guaranteed flop – Skeleton Crew, the two “tentpole” shows on Disney+ this year that will fail to sell any toys.

But Hasbro is apparently determined to stick to the license, or at least action figures (they are still the market leader in the action figure segment, despite a decline of 1.6 points, Hasbro accounts for about 25% percent of the entire action figure market). They seem to hope for better times and remain invested. In fact, they explicitly mention the Mandalorian & Grogu movie as something they look forward to. Too bad this movie will only come out in May 2026. But it seems Hasbro will at least wait for that movie. Should, for whatever reason, the toyline for that movie fail all bets are off in my opinion.

So we finally got it straight from the horses’s mouth. Star Wars is not selling. Which is not a surprise, given the state the franchise is in right now. The shows fail. The AAA video game failed. And the likelihood of Skeleton Crew bucking the trend is minimal. We all have seen the toys Hasbro was forced to make for the show. They will clog shelves or end up on bottom shelves at Ollie’s.

And that’s it. Hasbro is slowly moving away from board games and toys, which is in line with Chris Cocks’ strategy, and to digital gaming and trading cards. Those Magic cards cost next to nothing to produce and have dream margins. From a business point of view it’s more than understandable. Should Magic The Gathering ever lose its luster however Hasbro would be in deep, deep trouble. In fact, I believe they would be over. Maybe Chris should not put all the eggs in one basket. But for now things like Monopoly Go (the mobile game) and all things Wizards of the Coast keep making money.

What else: the situation in Europe is particulary dire. Consumer products sales in Europe declined by 22%, while the US saw a decline of just 8%. The situation is equally bad in Latin America with a 21% decline, only Asia sees growth with 33%, but Asia is a very small market for Hasbro. The US is by far the biggest market for them when it comes to toys: 61%.

To sum it up: Star Wars is in a sorry state in 2024. Now imagine how abysmal unit sales must be with those 2024 prices. It’s a disaster. Hasbro is slowly moving away from toys, because printed pieces of thin cardboard are so much more profitable and for unknown reasons people keep buying them.

And Hasbro is not even to blame really for the sorry state of Star Wars toys in 2024, the guilty party is Lucasfilm (and Disney). Not even a genius could sell The Acolyte toys. Why does Kathleen Kennedy still have a job again?

Hasbro earnings report
Hasbro earnings presentation (PDF)
Hasbro earnings call transcript via “The Globe and Mail”

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