Hasbro's mixed Q3 report highlights strategies for future growth
- Hasbro experienced a 10% decline in Consumer Products revenue in Q3 2024, heavily impacted by Star Wars and NERF sales.
- Wizards of the Coast saw a 14% increase in revenue, driven by successful releases in Magic: The Gathering and Monopoly Go!.
- Analysts view Hasbro's strategic shifts and cost-cutting initiatives as a foundation for potential growth moving forward.
In the third quarter of 2024, Hasbro faced mixed performance results, prompting analysts to adjust their ratings. The company experienced a 10% drop in its Consumer Products revenue, driven by poor sales in franchises like Star Wars and NERF. Conversely, the Wizards of the Coast division saw a 14% revenue increase, attributed to successful game releases, especially Magic: The Gathering and Monopoly Go! Despite the fluctuations, Hasbro maintained its EBITDA guidance, reflecting a conservative approach amid challenges. JPMorgan and BofA Securities have differing perspectives, with BofA noting the benefits from Hasbro's gaming and digital pivot, retaining a Buy rating with a $95 price target, while JPMorgan set a $79 target based on expected margin improvements. The company is implementing a $750 million cost reduction plan aimed for completion by late 2025, which analysts believe could enhance margins further. Looking ahead, Hasbro forecasts declines in the WOTC segment for the upcoming quarter, primarily due to several factors including a $70 million anticipated drop in Magic: The Gathering sales, influenced by previous releases and product timing. Consumer Products revenue is also expected to decline, prompting a guidance revision by $100 million. Nevertheless, the outlook for 2025 is optimistic with anticipated increases in gaming revenue. Overall, Hasbro's strategy showcases resilience, focusing on gaming innovations while navigating through the complexities of declining segments, reflecting potential for future growth as management improves operational efficiencies.