Hasbro (HAS 0.49%), one of the world's biggest toymakers, said it rebounded to a profit in the first quarter after a year-earlier loss, reporting earnings that exceeded analysts' forecasts by more than double.
Adjusted earnings per share (EPS) were $0.61 versus the average analyst forecast of $0.27. This profit compared with an EPS loss of $0.16 a year earlier.
Revenue, excluding the results of divested businesses, was $757.3 million, which beat expectations of $739.8 million. Adjusted for the divestures, revenue declined 9%, which the company attributed to a sharp 21% fall in sales of consumer products.
"We made solid progress in our turnaround efforts in the first quarter," Hasbro Chief Financial Officer Gina Goetter said in a statement.
Net income of $58.2 million, or $0.42 EPS, compared to a net loss of $22.1 million, or $0.16, in the year-earlier quarter.
The company said its focus on digital products and operational efficiencies underline a quarter of progress amid a challenging landscape.
Earnings data
| Metric | Current Period | Analyst Estimate | Prior-Year Period | % Change |
|---|---|---|---|---|
| Adjusted EPS | $0.61 | $0.27 | ($0.16) | N/A |
| Revenue (in millions) | $757.3 | $739.8 | $1,001.0 | (24%)* |
| Adjusted operating profit (in millions) | $116.2 | N/A | $17.9 | 549% |
*Reflects revenue decline because of divestures.
Understanding Hasbro
Founded in 1923, Hasbro's brands include, My Little Pony, Monopoly, and Magic: The Gathering.
Recently, Hasbro has pivoted toward digital gaming and entertainment while shedding most of its television and film division, which it sold to Lions Gate for $375 million in December. Management said this strategic alignment as crucial for navigating current market volatilities and positioning for future growth.
Quarter highlights
Hasbro said that the large EPS beat shows that measures to shed low-growth businesses and focus on operational efficiency by slashing staff were paying off. Revenue outperformance, particularly in Wizards of the Coast and Digital Gaming, reaffirms the merit of the strategic shift toward digital and gaming properties.
Despite divestitures and a significant revenue decline, digital gaming and entertainment segments rose, with the former growing by 7% and the latter by 65%, respectively. However, consumer products experienced a sharp downturn, largely due to industry trends, the company said.
One area of improvement was a 53% inventory reduction, which was part of an effort to control costs and focus on efficiency gains.
Looking forward
The company maintained a cautiously optimistic outlook for 2024, despite expecting continued pressure on consumer products revenue, which the company said would fall between 7% and 12% for the full year. The company also anticipates a full-year revenue decline of 3% to 5% in its Wizards of the Coast division, which makes the Dungeons & Dragons game.
Investors should monitor the unfolding strategy's impact on profitability and market positioning. Understanding Hasbro's capacity to navigate industry challenges while capitalizing on digital gaming and entertainment's growth opportunities will be essential for evaluating the company's future trajectory.
