PAWTUCKET – Hasbro Inc. reported a profit of $13.4 million in the second quarter, a 77.7% decline from the same 2018 period. Earnings per diluted share for the quarter were 11 cents, compared with 48 cents one year prior.
The year-over-year profit decline was in large part due to a noncash after-tax charge of $85.9 million in the quarter, the result of the settlement of the company’s U.S. pension plan liability. Excluding that charge, the company would have earned $99.3 million, or 78 cents per diluted share. For the period Hasbro paid 68 cents per share in dividends.
Revenue totaled $984.5 million for the quarter, an 8.9% increase year over year. Revenue for different regions and products lines ranged from $510.5 million in the United States and Canada (a 14% increase) and $377.4 million for international markets (a 1% decline, although the company said that removing the effects of foreign exchange issues, revenue from the rest of the world increased 5%). Revenue from entertainment, licensing and digital product lines totaled $96.5 million (a 28% increase).
“We delivered a high-quality second quarter, with positive consumer trends at retail and profitable growth led by several geographies and brand categories,” said Brian Goldner, Hasbro’s chairman and CEO in a statement. “Our investments are differentiating Hasbro’s portfolio and delivering profitable revenue streams, including continued Magic: The Gathering revenue growth in tabletop and digital. We … believe we are well-positioned to deliver against our target of profitable growth for the full-year 2019.”
In addition to its tabletop card game and an expanding digital footprint, Magic: The Gathering has an animated show planned for Netflix based on the game.
Brand segment performance for the second quarter:
- The company’s Franchise Brands had revenue of $576.7 million, a 14% year-over-year increase. The brand segment includes Magic: The Gathering, Monopoly and Play-Doh
- Hasbro’s Partner Brands segment reported revenue of $213.4 million, a 3% increase over the year, which it attributed to an increase in sales related to Marvel properties
- Hasbro Gaming revenue declined 8% year over year to $123.4 million – attributable to declines in sales of Pie Face and Duel Masters, offset by increases in sales of Dungeons & Dragons, Yahtzee and Connect 4
- The company’s Emerging Brands segment reported a 28% revenue increase from the same 2018 period to $71 million, which it attributed to increased sales related to Power Rangers, Furreal Friends and Playskool, including Mr. Potato Head
“The global Hasbro team executed a strong quarter with revenue and profit gains while managing a dynamic trade and inventory environment,” said Deborah Thomas, Hasbro’s chief financial officer. “As part of this process, we incurred some additional costs and took more inventory into the U.S. than typical. Despite these steps, margins improved, Hasbro’s overall inventory position declined, and we generated healthy operating cash flow. … Importantly, we are well positioned for the holiday season with major brand initiatives across categories, including The Walt Disney Company’s “Frozen 2” and “Star Wars: The Rise of Skywalker,” which do not launch until the fourth quarter.”
Hasbro sales took a significant hit following the shuttering of Toy R Us. In 2018, Hasbro reported a profit of $220.4 million, a 44.4 percent decline from $396.6 million in 2017. The decline also accompanied layoffs, with the company paying $89.3 million in severance charges that year.
In supplemental financial data to its quarterly release the company logged no incremental cost impact from Toys R Us in the six months ended June 30 and no severance costs in that time span either.
In the second quarter of 2018, the company reported a six-month loss of $52.2 million – compared with a $40.2 million six-month profit at the end of the second quarter of 2019. The company reported net income of $26.7 million in the first quarter of 2019.
Chris Bergenheim is the PBN web editor. You may reach him at Bergenheim@PBN.com.
