Key Points
- Total revenue for Q2 2024 fell 18% year over year to $995.3 million.
- Net earnings per diluted share were $0.99, an improvement on 2023's Q2 loss.
- The "Wizards of the Coast and Digital Gaming" segment showed strong performance gains marked by a 20% revenue increase.
Toy and entertainment giant Hasbro (HAS 1.83%)reported Q2 2024 earnings on Thursday showing a mixed quarter. The company faced challenges in its Consumer Products and Entertainment segments while seeing strength in its "Wizards of the Coast and Digital Gaming" division. The total revenue for the quarter was $995.3 million, representing an 18% year-over-year decline, attributed partly to the eOne divestiture. Excluding this divestiture, revenue declined by 6%. Hasbro's earnings per diluted share were $0.99, with adjusted earnings per diluted share at $1.22, aligning with management's focus on cost management and operational efficiencies. Both EPS figures were improvements on 2023's Q2 when the company reported losses.
Overall, the quarter highlighted uneven performance across segments but showed some operational improvements and strategic focus areas.
| Metric | Q2 2024 | Q2 2023 | Change (YOY) |
|---|---|---|---|
| Total revenue | $995.3 million | $1.21 billion | (18%) |
| Net Earnings per Share | $0.99 | ($1.69) | N/A |
| Adjusted Operating Profit | $249 million | $136.8 million | 82% |
| Consumer Products Revenue | $524.5 million | $655.2 million | (20%) |
| Wizards of the Coast and Digital Gaming Revenue | $452 million | $375.6 million | 20% |
| Entertainment Revenue | $18.8 million | $179.2 million | (90%) |
Source: Hasbro. YOY = Year over year.
Company Overview
Hasbro is known for iconic brands like Nerf, Play-Doh, and Monopoly, and operates in three main segments: Consumer Products, Wizards of the Coast and Digital Gaming, and Entertainment. Hasbro's recent business strategies focus on consumer-centric, story-led initiatives, operational excellence, and expanding digital and gaming areas. Recent focuses include the Blueprint 2.0 strategy, targeting operational efficiencies, digital expansion, and strong brand engagements.
Quarterly Performance Breakdown
The Consumer Products segment saw a significant 20% decline in revenue, influenced by timing, planned business exits, and reduced closeouts. Despite the challenges, brands like Furby, Play-Doh, and G.I. Joe showed strong performance, with positive momentum expected from Beyblade and Transformers innovations.
The "Wizards of the Coast and Digital Gaming" segment displayed robust growth with a 20% year-over-year revenue increase, notably from Magic: The Gathering’s Modern Horizons 3 set and digital gaming successes like Monopoly Go! and Baldur's Gate 3. Operating profit in this segment saw a 74% increase to an impressive 54.7% margin.
The Entertainment segment experienced a dramatic 90% revenue drop attributable to the eOne Film and TV sale. Excluding this divestiture, the revenue decline was 30% year over year. Despite the decline, there was a notable improvement in operating margin, moving from a $324 million loss to just a $1 million loss.
Hasbro also achieved approximately $90 million in net cost savings year-to-date, with inventory positions showing a 51% year-over-year reduction, indicating operational efficiency.
Looking Ahead
Management raised its full-year 2024 guidance, reflecting confidence in stronger performance in the latter half. Expectations include a slightly lower 7%-11% revenue decline in the Consumer Products segment but with no change in a forecast for an adjusted of 4%-6%. The Wizards of the Coast segment is anticipated to have a significantly lower 1%-3% revenue decline but maintain a solid 42% margin. Management also raised the high end of its adjusted EBITDA range and it now stands at $975 million to $1.025 billion for 2024.
Investors should watch for continuing digital growth, effective cost management, and potential challenges in the Consumer Products and Entertainment segments. Noteworthy focus areas are the ongoing innovative product launches, digital strategy execution, and operational efficiency improvements.
