Hasbro (HAS) Morgan Stanley Global Consumer & Retail Conference summary

Business overview and transformation

• Company is transitioning from a traditional toy manufacturer to a modern play company, with toys, games, and licensing each representing significant revenue streams.

• Toys and games each account for about 40% of revenue, with licensing making up the remainder; Magic: The Gathering is the largest and most profitable brand, recently surpassing $1 billion in revenue.

• The business is simultaneously in turnaround (toys) and transformation (games), with significant investments in self-published video games and digital experiences.

• Recent efforts include divesting non-core businesses, reducing SKU count by 80%, and lowering inventory levels to streamline operations.

• Innovation and go-to-market processes have been accelerated, with new brands launching faster and organizational structures simplified for efficiency.

Financial performance and outlook

• Toy business saw a 20% decline in the first half, mainly due to SKU reductions and lower closeout volumes, but profitability improved as a result.

• Closeout volume reduction created a $100 million top-line headwind but added $20 million to the bottom line; about a third of the 12-14% revenue decline is attributed to this.

• Inventory management and tight retail positions are expected to benefit 2025, with the category projected to remain flat or slightly up.

• Licensing, especially digital, remains highly profitable, with recent hits like Baldur's Gate III and Monopoly Go contributing close to $200 million in profit.

• Margin expansion efforts focus on stabilizing the top line, supply chain productivity, design-to-value initiatives, and overhead reduction, aiming for double-digit margins over time.

Strategic partnerships and licensing

• Licensing of legacy brands (e.g., FurReal, Littlest Pet Shop) continues to generate royalty revenue, adding to market share.

• Partnerships with Disney, Marvel, and Star Wars remain central, with a robust content pipeline for 2025-2026 expected to drive engagement and product launches.

• Retail relationships have become more strategic, with long-term planning and cross-category activations (e.g., Peppa Pig collaborations with Pampers and apparel).

• Licensing business is diversified across digital, apparel, home furnishings, and international markets, leveraging multi-generational brand appeal.

• Digital partnerships (e.g., with Scopely, Minecraft, Roblox, LEGO) and international successes (e.g., My Little Pony trading cards in China) are expanding the reach and profitability of the IP portfolio.