Hasbro Had $100M of Undelivered Product in Q3
Toy and entertainment company Hasbro, feeling the stress of supply chain delays, is relying heavily on its entertainment and digital gaming divisions as it continues to develop a contextual commerce strategy for many of its major brands.
Interim CEO Rich Stoddart said that as COVID-19 cases continue to fall and entertainment returns to pre-pandemic levels, Hasbro is starting to see its strategic plan framework “come to life, with significant potential to grow revenue and profit in the years ahead.”
A prime example of the Rhode Island company’s “omnichannel storytelling opportunity,” Stoddart told analysts on a conference call, is the new My Little Pony feature film that was released on Netflix in September. In the first weekend, the movie became the top children's movie on the streaming platform across 86 countries and the No. 1 movie overall in 20 countries, including the U.K, Germany, Brazil and Mexico.
In the four weeks leading up to the movie, POS was up mid-single digits globally, Stoddart said; in the week after the movie’s release, global POS jumped 150%. Since then, the film and its related merchandise have been supported by a dedicated My Little Pony shop on Amazon and campaigns at several major retailers.
Stoddart said that for each of the 200 TV and film projects currently under development, including content for 30 Hasbro brands in the coming years, the company intends to have “a robust content roadmap.”
“Hasbro is performing at a high level and with a clear, well-understood strategy to ensure that our success continues,” he said.
Delayed Shipments
Hasbro said its third-quarter revenues were up 11% year over year to $1.97 billion, with the entertainment segment up 76% and digital gaming revenue up 32%. Consumer products fell 3% in the quarter, which executives attributed to $100 million of products that had been ordered but weren’t delivered.
“There is strong demand for Hasbro toys and games, and we are expertly managing the supply chain to ensure the shelves will be filled,” Stoddart said. He added that in-transit merchandise, which accounted for 40% of Hasbro’s inventory balance at the end of the quarter, has been delivered since the fourth quarter began earlier this month.
Still, Chief Financial Officer Deborah Thomas said total transit times have nearly doubled “across all lanes,” adding that on certain lanes, transit times are as much as 50 days longer than pre-pandemic levels. Nike executives also noted longer transit times in a conference call with analysts last month, with Chief Financial Officer Matt Friend saying that all geographies will be impacted by slower shipment speeds.
See also: Factory Closures Cause 10-Plus Weeks of Lost Production for Nike
Unlike Nike, though, Hasbro executives said they are confident about its inventory going into the holiday season, though the company has had to utilize air freight more frequently than in years past. Thomas said, though, that Hasbro does not intend to raise prices further this year.
“We’ve got everything in place,” she said. “There will be Hasbro toys and games on the shelves this holiday season.”
Last week, rival Mattel said it has been successfully working through supply chain disruptions, particularly because the company owns its manufacturing facilities, which is a competitive advantage in terms of cost.
“It’s not that we were not impacted,” Chairman and CEO Ynon Kreiz said on a conference call. “But we did anticipate short supply and longer lead times and factored that into our planning.”
Read more: Mattel Shrugs off Holiday Supply Concerns, Citing ‘Scale and Expertise’
Looking for a New CEO
Hasbro is also looking for a new chief executive officer for the first time in 13 years, after former CEO Brian Goldner died earlier this month.
Last year, Goldner disclosed that he had prostate cancer and had been receiving treatment since 2014. Earlier this month, he took an immediate leave of absence for medical reasons and died two days later. Goldner had been part of Hasbro since 2000, served as CEO since 2008 and served as chairman of the company’s board since 2015.
“He was a true visionary who transformed an almost 100-year-old toy and game company into a leading global play and entertainment company,” Stoddart said, adding that “he changed the game completely. He believed in the power of a story, seeing the potential for omnichannel storytelling and content built on powerful brands.”
Stoddart said he will continue to serve as interim CEO until a permanent executive can be identified, but noted that Hasbro’s board “is and always has been thinking about succession as a matter of course.”
“It’s not a point of arrival, but a point of departure,” Stoddart said. “This is the beginning of the blueprint proving itself out in the world, and so I think the characteristics of a leader are a fantastic leader who believes in this team and this company and this culture, to take it forward and be someone who can continue to … drive that vision forward.”