HASBRO, INC. Q1 FY2025 earnings call

• Q1 demonstrated the effectiveness of Hasbro's play to win strategy with 17% revenue growth led by Magic and licensing. - Adjusted operating profit jumped 50% due to favorable mix and cost discipline. - Acknowledged tariff challenges but noted Hasbro's favorable positioning with US games having domestic sourcing, Wizards with low tariff exposure, and licensing with manageable partner exposure. - Extended multi-decade licensing agreement with Disney for Marvel and Star Wars, enhancing category rights. - Accelerating a $1 billion cost savings plan to offset tariff pressures, prioritizing key price points and retail partnerships.

Wizards of the Coast and digital gaming segment revenue grew 46% to $462 million, with operating margin reaching 49.8%, up 11 points year over year. Consumer products revenue declined 4% to $398 million, but the segment's adjusted operating loss improved 18% versus last year and adjusted operating margin improved 140 basis points. Wizards' segment revenue growth was driven by Magic Tabletop and digital licensing, with Magic revenue up 45%. Consumer products saw strength in licensing despite a 4% revenue decline.

• Full company guidance remains unchanged. - Wizards full year outlook raised, expecting revenue growth mid to high teens with low 40s operating margin. - Consumer products guidance unchanged due to wide range of tariff outcomes. - Targeting $175 million to $225 million in gross cost savings this year to offset tariff impacts.

• Tariffs could lead to higher consumer prices, potential job losses, and reduced profits. - Complex logistics and changes in receivables/shipping dynamics pose challenges. - Volatility from expanded tariffs on imports from China and potential reciprocal tariffs on other manufacturing hubs create uncertainty.

Q: Comment on tariffs and their impact on consumer toy spend?

A: Chris Cocks discussed scenarios like the 2008-2009 recession, noting the toy category tends to be resilient as a small luxury and gift-oriented category.

Q: What are conversations with retailers like regarding tariffs?

A: Gina Goetter mentioned fluid conversations with retailers, no major canceled orders, and focus on inventory and phasing throughout the year.

Q: Can you elaborate on the guidance raise for Wizards?

A: Chris Cocks and Gina Goetter explained that Wizards had strong Q1 performance, with Final Fantasy as a key driver, and the outlook raised due to momentum in multi-franchise strategy.

Q: How is Hasbro managing supply chain diversification?

A: Gina Goetter stated they are accelerating efforts to diversify sourcing footprints, targeting to reduce China exposure, and working on supply chain shifts and SKU rationalization.