Toy company Hasbro has reported a significant decrease in revenue and a pessimistic outlook for 2024. The company’s fourth-quarter revenue was more than 20% lower than expected, with earnings per share of 38 cents compared to the estimated 66 cents. For the full year of 2023, Hasbro experienced a 15% decline in revenue, largely due to sales drops in its consumer products and entertainment segments.
Despite these challenges, Hasbro saw an increase in revenue in its Wizards of the Coast and digital gaming segment, thanks to licensing revenue from games like Baldur’s Gate 3 and Monopoly Go. The company also made efforts to optimize its inventory and reduce costs. Hasbro reduced its inventory by more than 50% compared to the previous year and has plans to cut $750 million in costs by the end of 2025.
Chief Financial Officer Gina Goetter acknowledged the challenges faced by the company in 2023 but emphasized the steps taken to navigate the current environment. These steps included resetting the cost structure, optimizing inventory, and divesting from the eOne film and TV division. However, despite these efforts, Hasbro expects further revenue declines in the year ahead.
Looking ahead to 2024, Hasbro projects a 3% to 5% revenue decrease in its Wizards of the Coast segment and a 7% to 12% decline in its consumer products business. The company anticipates overall adjusted earnings before interest, taxes, depreciation, and amortization of $925 million to $1 billion. It is clear that Hasbro is bracing itself for a challenging year ahead.
This news follows a series of job cuts by Hasbro. In December, the company laid off 1,100 employees, adding to the 15% workforce reduction earlier in the year. These cost-cutting measures reflect the company’s efforts to navigate the difficult market conditions and optimize its operations.
Hasbro’s downbeat outlook for 2024 is a reminder that the toy industry continues to face challenges, particularly with the ongoing effects of the COVID-19 pandemic. Consumer behavior and preferences have shifted, and companies like Hasbro are adapting to these changes. The decline in revenue and the cautious forecast demonstrate the need for innovation and strategic decision-making in the toy industry.
Despite these challenges, Hasbro remains a well-established player in the market, with a strong portfolio of popular brands and licenses. The company’s focus on digital gaming and its successful partnerships, such as those with Wizards of the Coast, provide opportunities for growth and adaptation in a changing landscape.
As 2024 unfolds, it will be interesting to see how Hasbro responds to the evolving market conditions and whether its efforts to optimize operations and cut costs will lead to improved financial performance. The toy industry as a whole will need to find ways to engage consumers and adapt to the changing dynamics of play. With its long history and strong brand presence, Hasbro has the potential to weather these challenges and position itself for future success.
