Hasbro Reports Revenue Decline for Q4 2017

Last Updated on January 3, 2020 by Danielle

Hasbro

Hasbro’s revenue misses expectations by 2 percent for the fourth quarter due to slow consumer demand for the holidays, slow sales from Star Wars, Frozen, and Marvel toys as well as declines in Partner Brands and its business in Europe.

Hasbro’s fourth quarter results are officially in. Let’s just say the ‘Force’ was not with Hasbro this past holiday season, as in past years. Reportedly, Star Wars and Frozen toy sales were partly to blame for the fourth quarter sales slump. Although revenues fell short of expectations, Hasbro’s earnings exceeded expectations. Specifically, Hasbro reported revenue of $1.6 billion compared to a forecast of $1.72 billion, a shortfall of roughly 2 percent.

Brian Goldner, CEO of Hasbro, stated: “Overall consumer demand slowed in November and December both for the industry and for Hasbro. A decline in Partner Brands and Europe revenues resulted in us not meeting our fourth quarter revenue expectations.”

For the fourth quarter of 2017, Hasbro’s Franchise brands like Nerf, Monopoly, and My Little Pony experienced growth of 11 percent, while Hasbro’s Partner Brands, which encompass Star Wars, Frozen, and Marvel, plummeted 21 percent for the fourth quarter. Hasbro Gaming and Emerging Brands, which includes Baby Alive and Furreal Friends, also saw declines of 4 and 5 percent, respectively. Interestingly, the best-selling toy for Hasbro during the Christmas holiday season was Furreal Friends Roarin’ Tyler – the Playful Tiger.

Star Wars Toy Sales Decline

Hasbro believes the dip in sales is not Star Wars fatigue as some may think, but instead more related to the actual merchandise release dates and advertising. Goldner shed light on the fact that in between their Force Friday marketing in September and the launch of Star Wars: The Last Jedi in December, consumers were “bombarded with products from other entertainment properties, like Thor: Ragnorak and Justice League.” He added “narrowing those windows so you’re really able to take advantage of the specific marketing and these big marketing campaigns around the brands enables you to do quite a strong job in merchandising those films.”

Star Wars toys experienced phenomenal sales in 2015 for Star Wars: The Force Awakens. But it’s also worth noting this was the first Star Wars film in almost a decade. Goldner said in a statement, “Clearly there was a lot of pent-up demand across the board.” Some have argued that the recent bombardment of Star Wars films may be leading to movie tie-in fatigue.

Despite the hiccup in sales, Hasbro is expecting an uptick in Star Wars: The Last Jedi merchandise sales when the video launches on Blu-ray and DVD. The latest Star Wars flick, Solo: A Star Wars Story, doesn’t hit theaters until May 2018, but Hasbro will start advertising sometime in April.

Goldner said in a statement, “We continue to believe it will be that kind of business for us with great visibility to entertainment and great sustainability and frankly some better profitability for us as we go forward as we partner. Therefore, we could have a more valuable brand over the next five years than we’ve had over the period that led up to the 2015 movie those same five years.”

Looking at Hasbro’s 2017 full-year sales performance by segment, Franchise Brands, Hasbro Gaming, and Emerging Brands all experienced growth of 10 percent, 10 percent, and 2 percent, respectively. On the other hand, Partner Brands saw a 10 percent decline for all of 2017.

Toys R Us

Like Mattel, Hasbro also had issued warnings over weak holidays sales directly tied to Toys R Us’s bankruptcy filing. Hasbro’s main rival, Mattel, was heavily impacted by Toys R Us’ bankruptcy and reported a fourth quarter loss as well.

Toys R Us makes up roughly 14 percent of Hasbro’s sales in the United States and Canada, so Hasbro is heavily dependent on Toys R Us’s business.

Last month, Toys R Us announced plans to close about 182 retail stores in the United States in its rebounding efforts.

Goldner said in a statement, “We estimate less than half the stores in their announced closures directly affect our initial plans, but we also expect Toys R Us to streamline inventory at remaining stores. Much of this impact will be felt in the first two quarters of the year. We anticipate during 2018 that we will right-size our business with Toys R Us.”

Source: CNBC

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