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Shares of Hasbro Inc. (NASDAQ: HAS ) rose more than 2% on Thursday after announcing fourth-quarter 2022 earnings results. Earnings beat expectations while revenue came in line with projections. But the company expects revenue to decline in 2023 due to the challenging environment in the toys and games market.
Quarterly figures
In Q4 2022, Hasbro’s revenue declined 17% year over year to $1.68 billion, in line with consensus targets. Adjusted EPS rose 8% to $1.31, beating projections of $1.29. On a GAAP basis, the company reported a net loss of $0.93 per share, compared to EPS of $0.59 in the year-ago quarter.
Category performance
In the fourth quarter of 2022, Hasbro experienced a decline in revenue in its Consumer Products and Entertainment segments of 26% and 12%, respectively. Revenue at Wizards of the Coast and the Digital Gaming division increased by 22%.
MAGIC: THE GATHERING saw revenue grow 40% in the quarter due to strong initial orders from Domanaria Remastered and reorders from Warhammer 40,000. Tabletop revenue rose 40% to $267 million.
In Consumer Products, revenues declined across all geographic regions with North America down 30%, followed by Europe at 27%. The Asia-Pacific and Latin America regions experienced single-digit revenue declines. In the Entertainment division, revenues fell due to lower unscripted film and TV shipments in Q4 2022. Film and TV revenue fell 10%, while Family Brands revenue fell 28%.
In Q4, Hasbro recorded revenue declines across its brand portfolio with Partner Brands and Emerging Brands both down 30% YoY. Hasbro Gaming revenue declined 8% while total game revenue rose 5% in the quarter to $582 million. Franchise Brands is down 12%.
In FY2023, Hasbro expects revenue in Consumer Products to decline in the mid-single digits from last year, while revenue in the Entertainment segment is expected to increase in the low single digits. Revenue at Wizards of the Coast and Digital Gaming is expected to grow in the mid-single digits.
Outlook
Hasbro expects a challenging consumer discretionary environment in FY2023. This, together with the flat expected to go down the toys and game market, has led the company to lead to Less than one digit less in revenue for the year. Adjusted EPS is expected to be between $4.45-4.55.
Based on progress in Blueprint 2.0 implementation, Hasbro outlined mid- to long-term goals. The company expects single-digit revenue CAGR through 2027 along with high single-digit operating profit CAGR to achieve 20% fully adjusted operating profit margin by 2027. The toymaker also expects to generate $250-300 million at an annualized rate. cost savings by the end of 2025.
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