Hasbro posts financial results for Q1 2020

The company has reported a $69.6m loss in Q1, primarily attributable to costs related to the acquisition of eOne, but says its brands, especially its games, remain in high demand amid the outbreak of Covid-19

Written by Georgie Dobie

Posted 30.04.2020 | Business

Hasbro posts financial results for Q1 2020 thumbnail

Hasbro has published its financial results for Q1 2020 and provided a business update on Covid-19 related matters.

Financial results for Q1 2020 

The global play and entertainment company has reported net revenues for the first quarter 2020 of $1.11bn versus $1.20bn in 2019. Net loss for the first quarter 2020 was $69.6m, versus net earnings of $76.4m in 2019.

The results reflect combined results for Hasbro and Entertainment One (eOne), following Hasbro’s acquisition of the entertainment company at the beginning of the first quarter. The first quarter loss included $127.5m of acquisition-related expenses and $19.9m of purchased intangible amortization associated with the eOne acquisition. Excluding these items, adjusted net earnings for the first quarter 2020 were $77.7m.

Speaking of the results, Brian Goldner, Hasbro’s chairman and CEO, said: "The first quarter highlights what truly differentiates Hasbro: A global team that meets challenges creatively and nimbly; a diverse brand portfolio and retailer base, including best in class ecomm and omni-channel execution; a strong financial foundation and balance sheet; and a commitment to our purpose of making the world a better place for children and their families.

Reflecting on the Q1 results and speaking of her expectations for Q2 and the second half of the year, Deborah Thomas, Hasbro’s chief financial officer, said: "Hasbro is operating from a solid financial position with substantial liquidity available in both cash on hand and a revolving credit facility.

"The global team did a tremendous job navigating the challenges of the first quarter. Toward the end of the quarter, physical store closures and country-wide restrictions became more prevalent and entertainment productions shut down. As a result of Covid-19, we expect the second quarter to be more challenging than the first quarter of the year with revenues and earnings down versus pro forma 2019. We are taking prudent steps to lower expenses and preserve capital while positioning to meet the seasonal peak demand periods of the business in the second half of the year, including the holiday season.

“While the ultimate impact of Covid-19 will vary depending on how long it takes to reopen markets around the world, we are currently seeing healthy demand for our products and content."

Covid-19 Business Update

Meeting high demand against global store closures

Amid the outbreak of the virus, Hasbro has reported that consumer demand for its brands has been strong, led by games. The company said that its brands had been resonating with people spending more time at home, including games for families to play together and Play-Doh as kids engage in more creative play.  

Hasbro’s chairman and CEO Brian Goldner, said: “During the quarter, families and friends connected through Hasbro's robust portfolio of face-to-face games, created with Play-Doh and engaged in content and imaginative play with our brands and entertainment properties.  

“Our teams worked tirelessly to ensure product could get to consumers while managing the health and safety of our employees and partners globally who are navigating a global supply chain and retail landscape impacted by Covid-19. Point of sale at retail was strong during the first quarter and continues to be up in April.” 

To ensure that its products can get to consumers in spite of Covid-19 related challenges, Hasbro has reported that it is finding ways to accelerate online, expand omni-channel and skip the shopping cart to get our products into cars and homes.  

Global store closures, which increased towards the end of the first quarter, are expected to have a bigger negative impact on the second quarter results than during the first quarter. And while ecomm continues to be strong, this strength is not expected to offset declines at physical retail.  

Making up lost production time following factory closures

Third-party factories in China represent approximately 55 per cent of Hasbro’s manufacturing production. After operating at lower than planned production levels during the first quarter due to Covid-19, these factories are currently operating at planned capacity for this time of year. Assuming all production continues to operate without further Covid-19 shutdowns, Hasbro expects to be able to make up production lost in the first quarter in the second quarter and to be well positioned to meet holiday demand.  

Outside of China, manufacturing and warehouse partners operated at close to normal levels during much of the first quarter. Beginning in mid-March and through today, these locations are operating at varying levels of productivity depending on local government and safety considerations, with some markets operating at lower than normal production levels and other facilities have been closed for a period of time.  

The global Hasbro team is utilising its diverse global supply chain to meet demand from open facilities, existing inventory and to rapidly make up lost production. The company will be using its full complement of sourcing partners globally to ensure a quick recapture of any lost production on priority items. 

Playing a proactive role amid the coronavirus pandemic

Hasbro has said that that the health and safety of its employees, stakeholders and communities are the company’s top priority. Hasbro global offices, outside of China, were closed on March 16 and will re-open based on local governmental, health and safety guidelines. Its China offices reopened in March following shutdowns during Q1. 

Hasbro has committed additional support through global philanthropic initiatives that aim to bring relief to children and their families worldwide during this difficult time. Hasbro is proud to support Save the Children and No Kid Hungry in their effort to address the most urgent needs of children, including providing nutritious meals and distributing books and learning resources to those children and families most in need. In addition to providing financial support, Hasbro donated thousands of toys and games to low-income communities to continue to inspire creativity and fun for vulnerable children during the Covid-19 pandemic. 

In partnership with Cartamundi, Hasbro-sourced manufacturing locations are producing personal protective equipment (PPE) for front-line medical workers, including 50,000 face shields per week for the next several weeks, to be donated to local hospitals. 

The Wizards of the Coast team is supporting its Wizards Play Network (WPN) member stores during this challenging time. The team launched a reprint of Mystery Booster and will be allocating these boosters to WPN member stores at no charge, for sale to consumers at a later date. As local game stores are closed, they may run tournaments on Magic: The Gathering Arena. 

Plus, Hasbro’s Q1 launch of its global initiative, Bring Home the Fun, continues to provide parents and caregivers resources to help keep kids occupied and engaged during extended time at home and indoors. The initiative was created to further the company’s purpose to make the world a better place for children and their families.  


An update on eOne 

Speaking of the integration of eOne, Hasbro’s chairman and CEO Brian Goldner, said: "We made significant progress on the integration of eOne and while near term much of the team's production work has been delayed due to Covid-19, we are actively working together to unlock value from our brands and the eOne enterprise. Hasbro is creating play and entertainment experiences which are vital and desired by consumers and audiences this year and for the years to come.” 

In the first quarter, Hasbro has reported that entertainment revenues were down due to planned later delivery timing for eOne content.

Beginning late in the first quarter, production and delivery of television and film projects for Hasbro's eOne TV and Film business have been delayed, negatively impacting the level and timing of revenues. The eOne team continues to develop new projects and work on animation production which can be done remotely. The team now expects to deliver finished episodes and film projects later in the year than planned.

Several film release dates have moved to later in 2020, into 2021 and in some instances are going straight to video on demand/EST windows impacting the timing and level of anticipated revenues.

But with more people spending time at home, content viewership is high. There is a strong demand for animated content across all platforms and Peppa Pig is now the most viewed pre-school show in the world on the YouTube platform and PJ Masks is one of the most streamed children’s shows on Netflix in the UK and the US. And Hasbro says this bodes well for long-term brand engagement. 

For the full report, click here

Boris announces lifting of restrictions thumbnail

Boris announces lifting of restrictions

This afternoon prime minister Boris Johnson announces lifting of restrictions with non-essential retail due to open in April

Asmodee bring Valentine’s day joy to Manchester with free ‘Play On Demand’ delivery service thumbnail

Asmodee bring Valentine’s day joy to Manchester with free ‘Play On Demand’ delivery service

Asmodee celebrate a successful effort to bring some Valentine’s Day joy to people stuck at home under lockdown, after its ...

DKB Toys & Distribution appoints Norton PR for UK launch thumbnail

DKB Toys & Distribution appoints Norton PR for UK launch

Founded in 2020, DKB Toys & Distribution aims to become a one-stop-shop for some of the biggest and best toy ...

Press Releases

Radio silence broken on Novel Entertainment’s new Horrid Henry podcast thumbnail

Radio silence broken on Novel Entertainment’s new Horrid Henry podcast

The first podcast based on the award-winning Horrid Henry TV series will launch this week under new ‘Horrid Henry Unlocked’ ...

APC Kids signs trio of deals for CTC Media’s Kid-E-Cats thumbnail

APC Kids signs trio of deals for CTC Media’s Kid-E-Cats

New deals sees hit property’s footprint expand in Asia, Latin America and North America

Live the track with the Lego Technic Ducati Panigale V4 R thumbnail

Live the track with the Lego Technic Ducati Panigale V4 R

The Lego Group has revealed its latest Lego Technic model – the Ducati Panigale V4 R

Have a field day with Britains’ New Holland Tractor! thumbnail

Have a field day with Britains’ New Holland Tractor!

Tomy has revealed the latest launch from Britains – a New Holland T8.435 Tractor