COVID-19 contributes to a difficult Q2 for Hasbro

The toymaker's net revenue fell 29% in the second quarter, due to store closures and product shortages, although its gaming segment and online transactions were up.
July 27, 2020

COVID-19 continues to contribute to declines for Hasbro. The toymaker reported US$860.3 million in net revenue for Q2 2020, a 29% drop driven by temporary store closures, lower retail inventory and product shortages in fast-growing categories.

Hasbro acquired Entertainment One in Q1 2020 and its second quarter report reflects results for the combined company. Because it did not exist in 2019, Hasbro used pro forma results (hypothetical results for how a combined Hasbro and eOne would have performed in the same quarter of 2019) to calculate changes in revenue. Hasbro is reporting a pro forma Q2 2019 net revenue of US$1.2 billion, for example, while Hasbro alone generated net revenue of US$984.5 million in Q2 2019.

The toyco’s franchise brands and partner brands segments each declined 35%, to US$376.8 million and US$138.2 million, respectively. Hasbro’s emerging brands segment, which includes revenue from eOne’s Peppa Pig, PJ Masks and Ricky Zoom, saw net revenue shrink by 29% to US$76 million.

Net revenue for the entertainment, licensing and digital segment fell 7% to US$89.9 million for the second quarter. Hasbro’s TV, film and entertainment segment generated US$132.2 million in net revenue, a decline of 32%. And eOne’s net revenue for the period was US$160.9 million, down from US$231.1 million in Q2 2019.

The company’s gaming segment was a source of growth in Q2 2020, with revenue up 11% to US$137 million. Classic brands like Jenga, Connect 4, Battleship, Mousetrap and Twister contributed to the increase. Revenue for the total gaming segment, however, fell 19% to US$319 million. (The total gaming segment takes into account all gaming revenue from brands like Magic: The Gathering and Monopoly, which are included in Hasbro’s franchise brands segment.)

The company experienced a decline in each of its geographic regions. The US and Canada generated US$359.7 million in net revenue (a 30% decrease). Latin America was down 64%, Asia Pacific dropped 31%, and Europe declined 22%.

In Q1 2020, Hasbro reported a 7.5% decline in net revenue to the tune of US$1.11 billion. The company withdrew its 2020 outlook due to uncertainty related to the pandemic’s effect on supply chains, global retailer operations and entertainment production.

And while closures related to COVID-19 continued to impact Hasbro’s retail and shipping efforts in the second quarter, the company shifted its focus to e-commerce. Nearly 30% of its global toy and games revenue in Q2 2020 was generated online. Amazon, Walmart and Target were Hasbro’s largest customers during the period.

Looking forward, the toyco announced its factories and warehouses are now open in nearly all markets. As retailers continue to reopen, and production for entertainment resumes, Hasbro anticipates an improvement in Q3 2020 and a “good” holiday season.

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