Hasbro has faced a challenging 2023 to say the least – celebrated by merciless layoffs announced right before the holidays, too – reporting over $1 billion in losses for Q4, leading to a sharp drop of the company’s stock value.
In November 2023, Hasbro suffered one of its lowest Q3 results in recent history. By December, the company laid off 1,100 of its employees leading to a downgraded stock outlook in January 2024. It seems that negative trend continued, as indicated by the Hasbro Q4 Earnings Presentation.
Gina Goetter, Hasbro’s CFO, acknowledged that 2023 as a productive year but it was not without challenges. The company proactively addressed the prevailing environment, optimizing inventory, resetting cost structures, and focusing on key play aspects with the divestiture of eOne (Entertainment One).
Hasbro’s stock plunges toward worst day in four years after profit falls well below expectations https://t.co/gegXmrVNyZ
— MarketWatch (@MarketWatch) February 13, 2024
Later in the Q4 Earnings Presentation and Conference Call, CEO Chris Cocks highlighted key wins in both toys and games despite a tumultuous year. According to Cocks, the company entered 2024 with a healthier balance sheet, a leaner cost structure, and a diverse portfolio, emphasizing its commitment to the all-important investors.
Despite all of that, it is undeniable that Hasbro failed to meet its goals for Q4 of 2023. The financial report pointed out a 15% decline in overall revenue. The operating loss totaled $1.539 billion, which included $1.3 billion of “non-cash goodwill and intangible asset impairment charges” associated with the sale of eOne’s film and TV assets.
The Consumer Products Segment faced a 19% revenue decrease, driven by business exits and inventory management. The Entertainment Segment reported a 31% revenue decline due to the WGA (Writers Guild of America) and SAG-AFTRA (Screen Actors Guild-American Federation of Television and Radio Artists) strikes affecting film and TV revenues, including the mediocre performance of Dungeons & Dragons: Honor Among Thieves.
On the other hand, Wizards of the Coast (WotC) and Digital Gaming had fared better than the rest of Hasbro’s revenue streams. WotC’s major IPs Dungeons & Dragons and Magic: The Gathering led the pack, as these major segments of the company experienced a 10% revenue increase. Specific earnings highlights include the licensing and partnership with Larian Studios for Baldur’s Gate 3, the MTG crossovers and the digital Magic: The Gathering – Arena, and Monopoly Go.
As a result of the report, investors initially responded with caution, causing a steep nosedive in Hasbro’s stock (NASDAQ: HAS). It has since recovered slightly, but it currently remains at 51.32 USD per share, which is lower than its previous close.
Looking ahead in 2024, Hasbro expects a further 7-12% decline in Consumer Products Segment revenue and a 3-5% decline in Wizards of the Coast Segment revenue. Given this, the company emphasized its commitment to expense cuts, improved margins, and a focus on core business activities.
Hasbro’s efforts to optimize inventory, reset cost structures, and focus on play with the eOne divestiture theoretically positions the company for improved performance in 2024. The company is trying to seem like it knows how to turn things around, and knowing is half the battle.
Despite the challenges, Hasbro executives remain positive about the company’s future, emphasizing ongoing efforts to become a leaner, more focused, and profitable toy company. Wizards of the Coast has major events happening in 2024 that will further push the company’s top brands D&D and Magic: The Gathering. Can Hasbro mount a successful comeback from the substantial $1 billion loss?
