Hasbro and Mattel shares rise after earnings


Hasbro game maker

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Shares of toymakers rallied on Thursday after their rivals Hasbro And Mattel released quarterly results and offered upbeat commentary on how their intellectual property will drive their business.

Hasbro shares soared more than 13% on Thursday after the toymaker published in the first quarter revenues above Wall Street expectations. Board game maker Monopoly reported net revenue of $1 billion, beating the $878.4 million expected based on an average of analyst estimates compiled by Refinitiv. Revenue was down 14% year over year.

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The toymaker posted a first-quarter net loss of $22.1 million, or 16 cents per share, compared with net income of $61.2 million, or 44 cents per share, last year.

“The first quarter results exceeded our expectations and allow Hasbro to meet its financial goals for the full year,” Hasbro CEO Chris Cocks said in a statement.

Other toy stocks, including competitor Hasbro Mattel and pop culture consumer business Funko, also surged on Thursday. Funko is preparing to release its first quarter results next week. Toy makers announced this week that they will focus even more on the popularity of key brands to expand their reach.

The creator of Barbie Mattel posted first quarter results after Wednesday’s close that exceeded revenue expectations but fell short of earnings expectations. The company continued to face higher costs and a drop in demand for toys.

The toy industry as a whole has seen a downturn since the heights of the pandemic era, when parents were eager to buy toys to entertain newly housebound children. Along the way, inflation drove up the prices of toymakers like Mattel — and consumers largely fell back as toy prices got more and more expensive.

The Mattel booth on the convention floor at Comic-Con International in San Diego, California on July 21, 2022.

Bing Guan | Reuters

Amid the tough toy and game market, Hasbro and Mattel envision an increasingly IP-centric future.

On Monday, the rival companies entered a multi-year license agreement which will see the launch of co-branded toys and games using each company’s popular brands.

Hasbro will produce Barbie-branded Monopoly sets starting in fall 2023, while Mattel will make UNO sets and Transformer-branded Hot Wheels vehicles, slated for 2023 and 2024 releases, respectively.

The two toymakers have fought over licensing rights in the past. In 2022, Mattel won the license to make toys based on Disney’s princess line, beating Hasbro in the process. Previously, Mattel lost the license to Hasbro in 2016.

Outside of their collaboration, the two companies are both making strides to expand the reach of their own IP as they gear up for major movie launches this summer. Transformers: Rise of the Beasts by Hasbro Primordial is slated for release on June 9. Meanwhile, Mattel’s highly publicized film “Barbie” from Warner Bros. is slated for release on July 21.

Last fall, Hasbro’s board of directors authorized a sales process for some of its entertainment assets. Cocks told CNBC on Thursday that the company is “satisfied with the progress” so far and will have an update in its second quarter.

“Hasbro’s global team continues to execute our strategy to unlock the value of our rich IP library across our growth priorities, including in games, direct-to-consumer and licensing,” Cocks said in a statement. release related to Thursday’s earnings report.

In the first quarter, Hasbro’s entertainment segment revenue fell 19% year-on-year, falling to $185.4 million from $227.5 million last year.

Meanwhile, analysts are looking to see what boost – if any – Mattel will get from the Barbie movie, starring Hollywood heavyweights Margot Robbie and Ryan Gosling.

Outside of the Barbie movie, Mattel also announced that JJ Abrams’ production company Bad Robot will produce a Hot Wheels movie in partnership with Warner Bros. Discovery. The company also has movies in the works for its other brands, including Polly Pocket and Barney.

“As we continue to grow the toy side of the business, we are also putting in place a strategy and continuing to see growth in our intellectual property and capture value in our incredible franchises outside of the toy aisle. “, said Mattel CEO Ynon Kreiz in a 2022 CNBC interview.

In calls made with investors, Mattel executives noted that live-action films like Barbie are unlikely to spark the same toy uprising as animated films, meaning the film’s likely success may not pay off in doll sales for Mattel.

In the first quarter, doll gross billings, which represent amounts billed to customers, were $306 million. They fell in part due to the decline in sales of Barbie. Barbie’s worldwide gross billings fell 41% in the first quarter.

In the first quarter of last year, gross billings for dolls were $396 million, largely due to growth in sales of Barbie and Polly Pocket.

Mattel has yet to reveal its full plan to cash in on the Barbie movie hype. Previously, Mattel executives said the company would announce a toy line associated with the film that will appeal to children as well as collectors.

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