Hasbro profits take hit amid ‘challenging’ climate

Dive Brief:

Toy and entertainment company Hasbro Inc.’s top executives reported financial losses for the fourth quarter of 2022, amid inflation and what they characterized as a “challenging” consumer environment.
The company’s quarterly revenue fell to $1.68 billion, down 17% year-over-year, according to results announced in a statement and an earnings call on Thursday.
“While the end of 2022 did not meet our expectations, our focus on controlling what we can and making decisions to strengthen Hasbro for the future improved operating profit margin in a challenging environment,” Hasbro CFO Deborah Thomas, who is planning to retire, said during the earnings call.

Dive Insight:

The results highlight the ongoing risks that inflation poses to the bottom lines of many U.S. companies.

High inflation harms the average U.S. company by slowing growth 0.6 percentage point and undermining return on capital by 0.15 percentage point, McKinsey said in a study of the damage from price pressures to business performance during the half-century ending in 2020, as previously reported by CFO Dive.

Hasbro CEO Chris Cocks said the company is projecting a continued revenue decline in the coming year.

“For 2023, we expect the toy and game market to continue the trends of Q4 into the first two to three quarters of the year, given the lingering effects of consumer inflation,” Cocks said during the earnings call.

As part of its financial strategy, the company is “intensely” focused on cost savings goals and improving margins, Thomas said.

“We remain on track for $150 million in annualized run rate cost savings for year-end 2023,” she said. “This progress keeps us on the path to reach our targeted 20% operating profit margin in 2027, if not sooner, while also growing our existing business earnings and earnings per share over the period.”

In November, Hasbro announced that Thomas had decided to retire. “The Company is conducting a process to identify her successor, looking at both internal and external candidates,” the company said in a press release at the time. “Thomas and the Company plan for her to remain as Chief Financial Officer until her successor is in place, and as an advisor to the Company for a period thereafter to ensure a smooth transition.”