I took some time to read through an article on CNBC available here. Below are some thoughts on some key points.
Hasbro feeling the post-pandemic pinch as shares drop to levels not seen since 2015. Hasbro reported Q3 earnings that missed expectations.
CEO Chris Cocks is aware of “increasing price sensitivity” among consumers.
Here is my take, prices increased and sales dropped. Now keep in mind, they don’t sell straight to consumers. Retailers are ordering less because they are having trouble selling through the inventory they already have.
Hasbro reported third-quarter earnings Tuesday morning that fell short of analysts’ expectations as inflation weighed on consumers and the company contended with high levels of inventory.
Again, much like I said above. This is not surprising. Hasbro has a better connection with its consumer base than any of the other toy companies out there. The writing was on the wall. I would also suggest that many of the brand teams were aware of the changing trends. You don’t have to look much further then the latest HasLab.
Revenue for the period fell 15% compared to last year, dragged down by a 35% decrease in entertainment revenue. Its Wizards of the Coast unit, which includes “Dungeons & Dragons” and “Magic: The Gathering,” saw revenues decline by 16%.
This is huge. Dungeons & Dragons is one of their biggest franchises. Let’s hope the movie gives the brand a bit of a boost.
The company also pointed to several upcoming releases, including Marvel’s “Black Panther: Wakanda Forever” and the company’s own “Transformers: EarthSpark,” which the company will produce merchandise for during the fourth quarter and beyond.
Hasbro’s plan is to weigh heavy on its licenced tie-ins. Not surprising as it has been a formula that has worked in the past. Problem being, in my opinion, they have too many brands competing for the same dollar. I know some of the community will push back when I say this, these toys have been heavily marketed to collectors far more then the audience they should be intended for. Kids ages 5 to 14. Price increases reflect that. Parents like myself, want the most bang for our buck. So when I see a 6 inch Marvel figure at retail selling upwards of $50, then in the same store I see a 12 inch Mirrorverse Sully selling for $30, where do you think my spending dollar will go?
With the holidays approaching, the toymaker said it plans to “sell through inventory” in the fourth quarter as it seeks to stick to its plan of focusing on fewer, bigger brands and more licensing.
So in the short term, expect items to go on clearance. Great news for both collectors and families with kids. The Bad news however, expect more price hikes next year as Hasbro tries to limit any sort of loss. Counter intuitive maybe? Yes, but big companies like Hasbro tend not to see the problem sitting on the bridge of their nose. Oh well, let’s see what next year brings.