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Earlier this week, Mattel and Hasbro announced that they have entered into multi-year licensing agreements to create co-branded toys and games from some of their most popular brands.
Shares of Hasbro Inc (NASDAQ: HAS) and Mattel Inc (NASDAQ: MAT) edged higher on Thursday, April 28, 2023, after the two veteran toy companies reported first-quarter financial results. Hasbro shares closed Thursday trading at $58.93, up 14.63 percent from the day’s opening price. On the other hand, MAT shares closed the day trading at $18, up 6.07 percent from the opening price.
Hasbro Q1 Financial Results
According to the company’s Q1 2023 financial results, Hasbro topped analysts’ expectations after reporting net revenue of $1 billion, whereas Wall Street estimated the toy company would post net revenue of $878.4 million during the quarter.
Nevertheless, the company’s revenue declined by approximately 14 percent from $1.16 billion during the same period last year.
Notably, the company’s wizards and digital gaming net revenue increased by 12 percent YoY with growth in both MAGIC and D&d. MAGIC Reportedly, THE GATHERING reported revenue growth of about 16 percent.
“We expect the positive momentum for MAGIC to continue with Q1 also seeing one of our most successful pre-orders ever for our upcoming Universes Beyond The Lord of the Rings: Tales of Middle-Earth set which will launch in late Q2. Given our release calendar, we expect revenue for MAGIC to be down in Q2 but up solidly in Q3 and for the full year,” Chris Cocks, Hasbro CEO, noted.
Mattel Q1 Results
During the first quarter, Mattel posted net sales of about $815 million, down 22 percent YoY. As a result, the company noted that its net loss for the first quarter came in at approximately $106 million, compared to last year’s net income of about $21 million.
“While retail inventory management impacted the first quarter’s results, the underlying business performed well. Mattel achieved growth and gained market share, per Circana. The fundamentals of our business are strong. We expect to outpace the industry, gain market share, and achieve our full-year guidance. We are well positioned to continue executing our multi-year strategy and create long-term shareholder value,” Ynon Kreiz, Chairman and CEO of Mattel, noted.
Mattel and Hasbro: Future Outlook
Earlier this week, Mattel and Hasbro announced that they have entered into multi-year licensing agreements to create co-branded toys and games from some of their most popular brands. Reportedly, Hasbro will create Barbie-branded Monopoly games that are expected to launch later in 2023. On the other hand, Mattel will produce Transformers-branded UNO games, which will similarly be released later this year. Additionally, Mattel will debut Transformers-branded Hot Wheels vehicles early in 2024.
“With the major theatrical releases of the Transformers and Barbie movies in summer 2023, we’re excited to bring brand-new play experiences to fans, families, and movie and toy lovers all around the world,” said Casey Collins, President, Global Licensed Consumer Products & Business Development.
Having lost 41% over the past year, HAS stock has also plunged more than 4% in its year-to-date record.
Hasbro Inc (NASDAQ: HAS) is mirroring the same modest approach it employed in 2022 as it gives its 2023 guidance. After the company recorded a strong revenue surge in 2021, it gave a conservative outlook for 2022, stating inflation as a concern. According to chief financial officer Deborah Thomas, the toymaker did not expect the 2021 growth to continue at the same pace in 2022. The CFO predicted a decline or slow growth for the toy-making industry last year. At the same time, the company considered the leadership changes in the previous year’s projection as Chris Cocks got ready to take over from interim CEO Rich Stoddart. Stoddart filled the top position after the demise of Brian Goldner in October 2021. Another reason for the humble 2022 outlook was that Hasbro was considering the negative impact of the pandemic on its film production.
Hasbro Gives Gloomy Projections for Full-Year 2023
Again, Hasbro is being modest with its 2023 guidance. The company is expecting a full-year revenue decline. The company projected the revenue to fall percentage-wise in the low-single digits. Meanwhile, analysts predicted that Hasbro would pop 2.2% in 2023 revenue. Despite the company’s projection, Hasbro is hoping for a light at the end of the tunnel. It is calling for the declines to not last through the entire year. In a call with analysts, the CEO noted his expectations for the full-year performance. Cocks said he expects the continued slow consumer demand through the first quarter of 2023. That means there is hope for sales to rebound in the fourth quarter.
As inflation persists in 2023, Hasbro is exploring ways to continually cater to consumers. The CEO said the company is looking to unveil a new product line between $20 and $30. USB Executive Director Arpiné Kocharyan also confirmed that products in the toy industry below $30 is “performing quite well” while anything priced above is performing quite poorly.
More so, Hasbro hopes to see its new releases covered for the product sales decline it has recorded. Cocks said there are lots of entertainment scheduled to roll out in the second quarter, and they will have “a nice halo effect” on Hasbro in the last two quarters of 2023. For Wizards of the Coast, the CEO looks forward to “an up in Q1, a down Q2, a significant up Q3, and a fair up Q4.”
The toymaker’s stock added 0.07% in the last three months, making its first increase in the last 12 months. Having lost 41% over the past year, HAS has also plunged more than 4% in its year-to-date record.
Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience.
Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.