4 Must See Quotes From Hasbro's Management — and One from Mattel

This post was originally published on this site

When toymaker Hasbro, Inc. (NASDAQ:HAS) reported its financial results this week, the stock soared, ending the day up 14%. It’s easy to see why. Revenue grew 11% for the quarter and 13% for the year, exceeding $5 billion for the first time in the company’s history. It exceeded expectations for both revenue and profits by wide margins, and the press release and conference call provided a wealth of insight into the reasons for the dramatic out-performance.

Hasbro logo.

A tale of two companies

Many Hasbro investors had feared the worst due to disappointing results reported by competitor Mattel, Inc. (NASDAQ:MAT), whose stock fell over 17%, the day of its financial release two weeks prior. Why the stark difference? Comments made by each company’s management tell the tale.

In Mattel’s earning press release, Chairman and CEO Christopher Sinclair had this to say:

Our results were negatively impacted by a number of industrywide challenges, including a significant U.S. toy category slowdown in the holiday period, and increased forex [foreign exchange] headwinds. And while our sales at retail remained strong, the slowdown triggered elevated retail promotional activity and decreased shipping, all of which had a significant impact on our gross margin. 

Hasbro Chairman, President and CEO Brian Goldner had a completely different take on the quarter, noting Hasbro’s growth in nearly every region where it does business:

There has been a great deal of focus on the performance of the toy industry and the read through for Hasbro’s performance. Importantly, the industry is growing and continued to grow throughout 2016…we do not view and did not experience the season as different from other years. (Emphasis by author)

Goldner went on to point out that some rely too heavily on publicly available US industry data, which does not represent the majority of Hasbro’s business and missed important aspects of the company market, including: 

  • Club stores, grocery, drug stores, and value channels
  • Hobby stores, the primary venue for Magic: The Gathering
  • 5% of the company’s revenue from entertainment and licensing
  • Global sales, which represent 50% of Hasbro’s revenue
Monopoly Token Madness game box.

Working to eliminate stereotypes and gender bias

Hasbro also wants investors to know that is keeping up with the times and is working to eliminate gender stereotypes by reframing the reporting categories for its toys and games:

Beginning with the first quarter, we will no longer report revenue along the Boys, Games, Girls, and Preschool categories. Instead, we will provide a revenue breakdown of Franchise Brands, Partner Brands, Hasbro Gaming, and Emerging Brands. We believe this is a more relevant and appropriate view of our business.

Hasbro has struggled with gender bias in the past. In 2012, the company was called out by a girl who wanted a less feminine-colored Easy Bake Oven for her brother, and by a six-year-old girl for having too few girls represented in its game Guess Who? More recently, Hasbro made headlines for referring to all its Jurassic World dinosaurs as “he” on its packaging. Moving away from gender based categories is a good move by the company, showing it’s responding to social changes.

Long term view

Many times during the conference call, the company encouraged investors to take a long-term view, using the phrase 12 times. Here’s one example:

As many of you know, when we speak about our business we focus on full-year performance. This is due to our long-term perspective toward developing our brands, the seasonal nature of the industry, and the impact of many factors on weekly, monthly, and even quarterly sales trends. These factors include the timing of launches, holidays, the number of days or weeks in a period, promotional activity, retail inventory, and changes in share. 

This is an important lesson for investors. Far too many focus on the changes that occur each quarter and miss the big picture. It is refreshing to see a company that is focusing on the long-term and not so much on meeting investors’ and analysts’ expectations for the quarter.

Blue Transformers robot toy.

Shareholder returns

Hasbro also wanted investors to know that it is being a good steward and is taking every opportunity to return cash to shareholders:

Our strong cash position enabled us to return $400 million to shareholders through dividends and share repurchase, and the Board’s 12% quarterly dividend increase announced today is further indication of our positive outlook and confidence in the performance of Hasbro. 

With more than $1 billion in cash on its balance sheet, Hasbro is making a point to return cash while maintaining a prudent reserve. This is another indication of Hasbro’s long term view.

The bottom line

Each of these quotes is an indication of a company that has a finger on the pulse of its business, is in touch with what is happening in its industry, and refuses to be distracted from its long-term goals.

Danny Vena owns shares of Hasbro. The Motley Fool owns shares of and recommends Hasbro. The Motley Fool has a disclosure policy.

Be Sociable, Share!

Related Posts

 

MarketTamer is not an investment advisor and is not registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory Authority. Further, owners, employees, agents or representatives of MarketTamer are not acting as investment advisors and might not be registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory.


This company makes no representations or warranties concerning the products, practices or procedures of any company or entity mentioned or recommended in this email, and makes no representations or warranties concerning said company or entity’s compliance with applicable laws and regulations, including, but not limited to, regulations promulgated by the SEC or the CFTC. The sender of this email may receive a portion of the proceeds from the sale of any products or services offered by a company or entity mentioned or recommended in this email. The recipient of this email assumes responsibility for conducting its own due diligence on the aforementioned company or entity and assumes full responsibility, and releases the sender from liability, for any purchase or order made from any company or entity mentioned or recommended in this email.


The content on any of MarketTamer websites, products or communication is for educational purposes only. Nothing in its products, services, or communications shall be construed as a solicitation and/or recommendation to buy or sell a security. Trading stocks, options and other securities involves risk. The risk of loss in trading securities can be substantial. The risk involved with trading stocks, options and other securities is not suitable for all investors. Prior to buying or selling an option, an investor must evaluate his/her own personal financial situation and consider all relevant risk factors. See: Characteristics and Risks of Standardized Options. The www.MarketTamer.com educational training program and software services are provided to improve financial understanding.


The information presented in this site is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor. Nothing in our research constitutes legal, accounting or tax advice or individually tailored investment advice. Our research is prepared for general circulation and has been prepared without regard to the individual financial circumstances and objectives of persons who receive or obtain access to it. Our research is based on sources that we believe to be reliable. However, we do not make any representation or warranty, expressed or implied, as to the accuracy of our research, the completeness, or correctness or make any guarantee or other promise as to any results that may be obtained from using our research. To the maximum extent permitted by law, neither we, any of our affiliates, nor any other person, shall have any liability whatsoever to any person for any loss or expense, whether direct, indirect, consequential, incidental or otherwise, arising from or relating in any way to any use of or reliance on our research or the information contained therein. Some discussions contain forward looking statements which are based on current expectations and differences can be expected. All of our research, including the estimates, opinions and information contained therein, reflects our judgment as of the publication or other dissemination date of the research and is subject to change without notice. Further, we expressly disclaim any responsibility to update such research. Investing involves substantial risk. Past performance is not a guarantee of future results, and a loss of original capital may occur. No one receiving or accessing our research should make any investment decision without first consulting his or her own personal financial advisor and conducting his or her own research and due diligence, including carefully reviewing any applicable prospectuses, press releases, reports and other public filings of the issuer of any securities being considered. None of the information presented should be construed as an offer to sell or buy any particular security. As always, use your best judgment when investing.