Hasbro’s stock took a hit after the toy maker reported weak third quarter results, and CEO Chris Cocks warned that consumers are showing resistance to higher toy prices.
Cocks said Hasbro has “seen the average consumer become increasingly price-sensitive as the year has progressed, impacting point-of-sales trends.”
He expects discounts and retail promotions to become increasingly important during the holiday season and beyond.
Net revenue for the quarter was $1.68 billion, down 15% from the third quarter of 2021, or 12% after adjusting for foreign currency exchange rates. Adjusted earnings were $1.42, missing Wall Street consensus expectations of $1.53.
Hasbro’s stock was down 2.6% at 12:30 p.m. today, at $65.93.
At the investor presentation Oct. 4, Cocks and his executive team announced that Hasbro had conducted a nine-month long strategic review that resulted in a new game plan for the company, that they are calling Blueprint 2.0.
Cocks, at the investor presentation, called Blueprint 2.0 “the biggest change yet” in Hasbro’s underlying business strategy.
The new blueprint prioritizes bottom-line growth, and to shifts Hasbro’s focus to fewer, bigger, and more profitable toy brands, while turning smaller, less profitable brands into licensed properties that would be manufactured and sold by other toy makers.
The bigger brands Hasbro plans to focus on going forward include Magic the Gathering, Hasbro Gaming, Nerf, Dungeons & Dragons, Transformers, Peppa Pig, and Play Doh.
The new blueprint calls for Hasbro to grow adjusted operating profits by 50% by the end of 2025.
Focusing on fewer brands with bigger potential will help drive $250 million to $300 million in savings by the end of 2025, according to Hasbro.
“This management team isn’t satisfied with our performance in Q3,” Cocks said in announcing the earnings results today. But the new blueprint, he said, “will gather momentum over the coming quarters.”
The company, he said, has a number of exciting releases that will fuel growth in the fourth quarter, including the re-release of the Black Lotus card for the Magic the Gathering game, making it available for the first time in over 25 years.
It also has a new party game themed to the viral online game Wordle, and toy lines tied to the release of the Black Panda Wakanda Forever movie.
Hasbro also has merchandise releases tied to six additional blockbuster films and 20 scripted and unscripted TV shows in 2023.