After rival toymaker Mattel Inc. (MAT, Financial) posted record earnings late last week, Hasbro Inc. (HAS, Financial) reported its first-quarter results before the opening bell on Tuesday.
The Pawtucket, Rhode Island-based toymaker, which is known for its Nerf, Play-Doh, My Little Pony and Monopoly brands, recorded adjusted earnings of $1 per share for the three months ended March 28, topping Refinitiv's estimates of 65 cents. Revenue increased 1% from the year-ago quarter to $1.11 billion, but fell slightly short of the $1.17 billion analysts were anticipating.
In a statement, Chairman and CEO Brian Goldner commented on Hasbro's performance.
"The global Hasbro team executed a very good quarter, driving strong sell in and demand in the Consumer Products segment; growing both analog and digital revenues in Wizards and our licensed digital gaming business; and positioning us to deliver growth for the full year in the Entertainment segment," he said.
In the consumer products segment, Hasbro saw sales grow 14% to $653.9 million, driven by demand for its Play-Doh, Nerf, Transformers, Star Wars and Disney princess products, among others, as children were stuck entertaining themselves at home during the Covid-19 pandemic.
There was also higher demand for Monopoly, "Magic: The Gathering" and "Dungeons & Dragons" games, pushing sales in the Wizards of the Coast and Digital Gaming division up 15% to $242.2 million.
Rather than rely on traditional toy sales, Hasbro has embraced entertainment production as a way to power growth in recent years. The pandemic weakened that strategy, however, as the company had to shut down its TV and film operations, leading to a 32% decline in sales to $218.7 million. Advertising costs fell 13.6% during the quarter, however, since the company pulled back on promotions for its movies and shows. On Monday, Hasbro announced it is selling Entertainment One Music to Blackstone Group Inc. (BX, Financial) for $385 million.
Despite the weakness in this particular business, Goldner continues to be optimistic about the company's future performance.
"We continue to target full-year double-digit revenue growth for Hasbro supported by innovation and quality execution throughout the business," he said. "Across Hasbro we are focused on unlocking the full potential value of our brands and capabilities as a play and entertainment leader."
Chief Financial Officer Deborah Thomas noted that the company ended the quarter with $1.43 billion in cash after retiring $300 million in debt.
Hasbro distributed $93.4 million in cash dividends during the quarter. Its next payment of 68 cents per share will occur on May 17.
With a market cap of $13.46 billion, Hasbro shares were up around 2% at $98.85 on Tuesday morning. GuruFocus estimates the stock has risen nearly 5% year to date.
Disclosure: No positions.
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