Hasbro, which completed its acquisition of Entertainment One (eOne) at the beginning of the first quarter 2020, has reported its financial results for the second quarter 2020 and provided a business update on Covid-19 related matters.
The company reported that net revenues were $860.3m – down by 29 per cent compared with the same period in 2019 (Q2 2019 revenues were $1.2bn). Hasbro said that foreign exchange had a $15.8m negative impact on Q2 revenues. Meanwhile, pro forma net loss for the second quarter 2020 was $33.9m, versus pro forma net loss of $42.6m in 2019.
During the second quarter, Hasbro reported that second quarter consumer demand was up for Hasbro brands, led by games. Hasbro's Gaming revenues grew 11 per cent and gaming point of sale was up globally over 50 per cent. Jenga, Connect 4, Battleship, Mousetrap, and Twister were among the top revenue increases in the quarter.
Amid the pandemic, Hasbro reported a dramatic shift to ecommerce, with nearly 30 per cent of global toy and game revenues being transacted online in the second quarter. Led by strength in ecommerce, where consumers have broad access to Hasbro brands, the company also reported that global consumer point of sale had increased to double-digit gains in the US, the UK, France, Italy and Australia. Hasbro said that shipments and point of sale remained strong for Hasbro's products for Disney's Frozen 2 and Lucasfilm's Star Wars. And several other brands, including Play-Doh and Nerf, had positive point of sale for the quarter.
Due to the outbreak, the company said that supply chain disruption led to in stock levels below normal thresholds and limited shipments in the quarter. And retail inventories declined reflecting the shift to ecommerce, temporary store closures and retailers' management of inventory and cash levels. However, the company’s factories and warehouses are now open in nearly all markets and positioned to meet full-year product demand requirements. And Hasbro also reported that as stores began to reopen late in the second quarter, shipments and point of sale improved – a trend which has continued into July.
In terms of entertainment, while viewership and demand for content were high in the second quarter, eOne entertainment revenue was negatively impacted by live action production shutdowns throughout the second quarter, delaying the completion and delivery of productions and timing of revenues to both later in 2020 and into 2021. However, live action TV and film production is returning gradually, beginning this quarter. Animation production has continued, including for Peppa Pig, PJ Masks and the 2021 My Little Pony animated feature film.
Speaking of the second quarter period, Brian Goldner, Hasbro’s chairman and chief executive officer, said: “The global Hasbro team is executing our playbook amidst a dynamic and challenging environment. They are doing so with creativity and agility, identifying new and efficient ways to operate, capitalising on our investments in creating a digital-first orientation while keeping our innovation engines moving and leveraging the expertise of a management team that has led through challenges in the past.
"The second quarter was much as we expected: strong point of sale for Hasbro brands countered by a very challenging revenue period due to global closures in our supply chain, across retailers as well as in entertainment production. We believe the outlook improves from here. Consumers - children, families, fans and audiences – are relying on Hasbro brands and stories to connect and entertain themselves throughout this period. While the full-year Covid-19 impact geographically remains unpredictable, as stores reopen and we begin to return to production for entertainment we expect the environment to improve in the third quarter and set us up to execute a good holiday season.
"Over the next few years, we are positioned to benefit from the investments we have made in ecommerce, entertainment and digital gaming. We have a strong entertainment lineup for 2021, through internally developed as well as third-party entertainment. We will also begin to see a greater benefit of synergies from the acquisition of eOne as we remain on track to deliver against our plan of $130m in synergies by year-end 2022."
Deborah Thomas, Hasbro’s chief financial officer, added: "Hasbro remains in a strong financial position, with over $1bn in cash on our balance sheet and a $1.5bn revolving credit facility available to us, should we need it.”