Latest news with #HasbroInc
Yahoo
25-04-2025
- Business
- Yahoo
Hasbro executives forecast major profit cuts from Trump tariffs; HQ relocation still TBD
A Mr. Potato Head stands vigil outside Hasbro Inc's headquarters on Newport Avenue in Pawtucket. (Photo by Alexander Castro/Rhode Island Current) You wouldn't know there was an escalating global trade war by looking at Hasbro Inc.'s first-quarter balance sheet. But the Pawtucket company's $887 million first-quarter profit doesn't reflect $100 million to $300 million revenue in losses projected for this year as a result of 'reciprocal' tariffs with China and other key international manufacturing hubs for its products. In an earnings call with investors Thursday morning, hours after Hasbro posted its first-quarter financial report, CEO Chris Cocks detailed the challenges that lie ahead for the toy and game empire under President Donald Trump's current tariffs. 'Even with Hasbro's relative strength and flexibility, logistics are becoming more complex and changes in receivables and shipping dynamics present a challenge,' Cocks said. 'Ultimately, tariffs translate into higher consumer prices, potential job losses as we adjust to absorb increased costs, and reduced profits for our shareholders.' There were no specifics shared on layoffs or price hikes. Hasbro has accelerated a shift away from manufacturing in China — where 50% of its toys are made now — and intends to reduce its reliance on Chinese materials and labor to less than 40% of toys by 2026, Gina Goetter, Hasbro chief operating and financial officer, told investors during the call. Other cost-cutting measures on the horizon include 'source optimization' and 'targeted pricing actions.' Together with potential layoffs and 'prioritizing debt reduction,' Goetter estimated the company would see a net profit loss of $60 million to $180 million this year, mostly reflected in the second half of the year. The estimates are based on an existing 145% U.S. tariff on Chinese goods and a 10% tariff on goods from other countries. No mention was made of Hasbro's potential relocation to Massachusetts during the earnings call nor in the financial report. But costs associated with swapping its circa 1900 headquarters on Newport Avenue in Pawtucket for a piece of prime Boston-area real estate could be off the table as uncertainty roils the stock and bond markets. Earlier this month, as Hasbro's stocks plunged to a 52-week low, company executives postponed the headquarters announcement. Originally expected within the first three months of the year, Hasbro now expects to provide 'clarity' on potential moving plans in the summer, Andrea Snyder, a company spokesperson, said previously. Gov. Dan McKee's office was last in touch with Hasbro via email on April 11, Olivia DaRocha, a spokesperson for McKee's office, said in email Friday afternoon. Earlier this month, DaRocha said the administration will 'remain engaged' with Hasbro. The publicly traded international company first opened as a family-owned pencil box maker in Providence, and still employs roughly 1,000 workers in Rhode Island. The economic roller coaster set off by Trump's trade policies has not yet hit home for Hasbro, though. The company saw profits rise 17% compared with a year ago, boosted by a 46% increase in its digital gaming business, featuring Magic: The Gathering and Dungeons & Dragons products. Its digital gaming segment has been shielded from tariffs because its products are made in the U.S., or are digital, executives said. The company has also not revised its guidance to investors on its annual performance. 'While we are dealing with a wide range of potential tariff, retailer and consumer outcomes, our games business and our strategic flexibility give us options,' Goetter told investors on the call. Earnings per diluted share rose to 70 cents per share, up from 42 cents a year ago. Hasbro also saw stocks rebound slightly in the last 30 days. Shares opened at $61.84 Friday morning. Updated to include a response from Gov. Dan McKee's office. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Business Journals
24-04-2025
- Business
- Business Journals
Hasbro reduces China exposure, boosts profits with Wizards segment
Story Highlights Hasbro plans to reduce Chinese manufacturing while maintaining presence there. Company's Wizards segment drove strong Q1 revenue and profit growth. Hasbro is pushing for zero tariffs on toys and games globally. Amid shifting trade directives from the White House, Hasbro Inc. (Nasdaq: HAS) plans to reduce its Chinese manufacturing footprint but not completely exit the country. "Today, roughly 50% of our U.S. toy and game volume originates from China, and we're accelerating a plan to bring that down meaningfully starting this year," CFO Gina Goetter said on a Thursday morning earnings call. "China will continue to be a major manufacturing hub for us globally, in large part due to specialized capabilities developed over decades." Toys involving electronics are best manufactured in China, CEO Chris Cocks added. On the other hand, Play-Doh, now mostly made in China, could be produced elsewhere, perhaps by boosting production in Turkey. All in all, the Pawtucket-based Hasbro (Nasdaq: HAS) is cutting costs, running scenario models, resisting "analysis paralysis," and making "no regret moves" in the face of policy uncertainty, Geotter told analysts on the Q1 call. Hasbro uses an "asset-light" manufacturing approach. The reliance on third parties gives it flexibility to pull up stakes in one country and move to another, said Cocks. Still, such moves involve costs. Countries new to Hasbro must develop new manufacturing capabilities. Supply chains and logistics must be re-routed. And amid U.S. tariffs, the company is leaning into export markets in Asia and Europe. Hasbro is better positioned than its toy-and-game peers that have greater exposure to China. That means potential "white space" on store shelves this year, providing an opportunity for Hasbro to fill the consumer gap, said Goetter. Hasbro is presuming 145% tariffs on China and 10% reciprocal tariffs on all other countries this year. It's also presuming a single-digit drop in toy spending, akin to consumer toy-buying behavior during the 2008 financial crisis. "It tends to be a category of small luxuries," said Cox. "It tends to be a category that is heavily gift-oriented." Conversations with retailers are underway, with an emphasis on maintaining price points, especially for "fantastic gifts that kids will be asking for, and moms and dads and uncles and aunts will want to give." Meanwhile, "hundreds of SKUs" will be moved from China-based factories to other countries. In tandem, Hasbro is accelerating an effort to cut $1 billion in run-rate costs. "So we're staying focused on what is known," Goetter said regarding strategy. "And right now, what is known is the 145; the ten.... It's good for us to have a more diversified footprint, so we'll just keep moving on that path." Hasbro: White House should zero-out toy tariffs Hasbro's consumer products segment is its least profitable, but accounts for 45% of net revenue. The toy-and-board-game segment lost money in Q1, but beat expectations with better margins and less red ink. Entertainment had a solid quarter with traction expected due to brand partnerships with film studios including Disney, said Cocks. Hasbro's big profit-and-growth center is Wizards of the Coast and Digital Gaming, home to Magic: The Gathering, Dungeons & Dragons, and digital play hits including Monopoly Go! and Baldur's Gate 3. Digital gaming revenues, largely insulated from tariff threats, are benefitting from a growing customer base, said Cocks. Overall, Hasbro landed a strong Q1 as its Wizards segment saw 46% year-to-year growth. Wizards made $230 million in three months with an operating margin of nearly 50%. Across all three segments — consumer products, Wizards, and entertainment — Hasbro increased its revenues by 17% and boosted its operating profit by 47%, thanks largely to the success of Wizards. Hasbro stock rallied following the earnings release with 16% growth by noon. Shares were trading at around $61 and the company showed a market cap of $8.5 billion. Cocks said Hasbro is among a group of companies lobbying the Trump administration to cut toy-and-game tariffs completely. "As such, we fully endorse The Toy Association's advocacy for zero tariffs on toys and games globally, either on U.S. exports or on imports," the CEO said. "We believe there should be free and fair trade on toys, an industry critical not only to thousands of American jobs, but also to the joy and developmental well-being of millions of children, families and fans across the U.S." Executives made no mention of Hasbro's plan to leave Pawtucket and establish a new headquarters location, perhaps in Boston. The company recently said that it will delay any decision on such a move until at least June. Sign up for Providence Business First's free daily newsletters.
