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Toymaker Hasbro's turnaround efforts buoy quarterly results, shares rise

People walk past the Beyblade Burst Speedstorm, by Hasbro, Inc., on display in the FAO Schwarz toy store in Manhattan, New York City
July 25, 2024
Savyata Mishra - Reuters

(Corrects James Zahn's designation in paragraph 3 to editor in chief at The Toy Book, not senior editor)

By Savyata Mishra

(Reuters) - Hasbro posted a smaller-than-expected drop in second-quarter sales and beat profit expectations, helped by cost-control measures and steady demand for digital gaming, sending shares of the toymaker up 7% in early trading on Thursday.

Toymaker Hasbro's turnaround efforts buoy quarterly results, shares rise
The Hasbro, Inc. logo is seen on Frozen 2 toys for sale in a store in Manhattan, New York

The Nerf toy gun maker's turnaround strategy to limit expenses and maintain a tight inventory amid an industrywide slowdown in toy demand has helped its margins grow in the quarter to 21.3%, compared with a 15.6% decline a year earlier.

"Hasbro has made great strides in reducing its inventory...which will lead to cost savings in various ways, including lower production costs, shipping, and storage, and reduced markdowns and close outs," said James Zahn, editor in chief at popular magazine The Toy Book.

The company's move to hive off a chunk of its entertainment asset, eOne, last year to improve focus on toy sales, digital gaming strategy, as well as international publishing deals, has also helped.

It now expects annual core profit to be between $975 million and $1.025 billion, up from its prior forecast of $925 million to $1 billion.

Toymaker Hasbro's turnaround efforts buoy quarterly results, shares rise
The Hasbro, Inc. logo is seen on a toy for sale in a store in Manhattan, New York

Hasbro is seeing "encouraging" signs of early demand in its toy segment and "retailer support" for the back half of year, which includes the critical holiday shopping season, company executives said on a post-earnings call.

Steady growth in its mobile and video games, including "Monopoly Go!" and "Baldur's Gate 3", led to a 20% jump in quarterly revenue from the company's "Wizards of the Coast" unit.

Total quarterly revenue fell 18% to $995.3 million in the reported quarter, compared with a 22.02% fall estimated by analysts, according to LSEG data.

On an adjusted basis, Hasbro earned $1.22 per share, above estimates of 78 cents.

Toymaker Hasbro's turnaround efforts buoy quarterly results, shares rise
The Star Wars Galactic Snackin Grogu toys, by Hasbro, Inc. are seen on display in the FAO Schwarz toy store in Manhattan, New York City

Barbie maker Mattel also topped Wall Street estimates for second-quarter profit, aided by a tight control on costs even as it posted a surprise drop in sales. (This story has been corrected to change James Zahn's designation to editor in chief at The Toy Book, not senior editor, in paragraph 3)

(Reporting by Savyata Mishra in Bengaluru; Editing by Shounak Dasgupta and Shinjini Ganguli)

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