Action Figures, Board Games Drag Down Hasbro
: Outsiders - 2005.02.08
Hasbro released its Q4 and full year 2004 results on Monday, reporting that weakness in its U.S. Toys and Games segments weakened sales and earnings vs. expectations. Sales for the year were $3 billion, vs. $3.1 billion in 2003. Earnings were $196 million, vs. $158 million in 2003.
Q4 U.S. toy sales dropped 17% to $264 million from $319 million a year ago. Q4 U.S. games sales dropped 8% to $270 million from $294 million in 2003.
A tough year for action figures worldwide affected Hasbro's sales of G.I. Joe, Transformers, and Action Man. Beyblade sales continue to plummet, showing a $229 million decline for 2004 vs. 2003.
Traditional board games were the culprit in the games division.
An anecdote on toy margins during the conference call illustrates the power that retailer pricing has on manufacturers. Hasbro's successful Video Now Color product was used as a loss leader by a single retailer, causing other retailers to also discount the line. Those retailers then appealed to Hasbro to eat some of their lost margin and help keep shelves clean for the new season. Hasbro instituted a number of promotional programs, causing a "significant negative impact on U.S. toy segment profitability."
Asked during the conference call about Duel Masters, company execs said that the property had "met expectations," with stronger results in some areas of the world than others. TCG sales over-all were up, with Duel Masters sales more than offsetting one less Magic release in 2004 vs. 2003.
Looking ahead to 2005, Hasbro's expecting strong sales from its Star Wars line in conjunction with the Revenge of the Sith release, better action figure sales behind improved TV exposure for G.I. Joe in the second half of the year and a "re-inventing" of G.I. Joe and Action Man. Hasbro's also touting the 70th anniversary of Monopoly as helping to stimulate board game sales.
The Transformers line is going to expand in 2005, and in 2006, the Transformers live action movie executive-produced by Steven Spielberg is expected to stimulate sales of the brand.
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