HASBRO, INC. at a Glance

Uppers

  • Top corporation in “play” industry
  • One of Fortune magazine's 100 Best Companies to Work For

Downers

  • Recent layoffs
  • Outdated facilities and infrastructure

The Bottom Line

  • While Hasbro has garnered an exhaustive list of awards and recognition, the company is in need of comprehensive updating.

About HASBRO, INC.

It's all fun and games at Hasbro, the #2 toy maker in the US (after Mattel) and the producer of such childhood favorites as G.I. Joe, Play-Doh, Tonka toys, Mr. Potato Head, Nerf balls, and My Little Pony. Besides toys, Hasbro makes board games under its Milton Bradley (Scrabble, Candy Land), Cranium, and Parker Brothers (Monopoly, Trivial Pursuit) brands, as well as trading cards including Magic: The Gathering (through its Wizards of the Coast unit) and Dungeons & Dragons. Hasbro is also famous for making Star Wars action figures. In addition to Disney and Disney's Marvel Entertainment, Hasbro licenses popular names and characters for other toys and games.

Operations

Hasbro's boy-oriented brands accounted for 40% its total sales during 2015, while games brands made up another 29% of sales. The rest of its sales came from girls-oriented brands (18% of sales) and preschool-oriented brands (13%).

Geographic Reach

About 50% of Hasbro's total sales came from the US and Canada during 2015. Europe is its largest international market, accounting for nearly two-thirds of overseas sales, while emerging markets (including Brazil, China, and Russia) made up the rest. The toy maker operates in 40-plus countries across the Americas, Europe, and Asia, though almost all of its products were sourced from third-party facilities the Far East (mostly in China).

Sales and Marketing

Hasbro's products are sold through wholesalers, distributors, chain stores, discount stores, drug stores, mail order houses, catalog stores, and department stores, among other outlets. The company's top three customers include Wal-Mart (which accounted for 16% of sales in 2015), Toys R Us (9%), and Target (9%). In the US, approximately 59% of the toy maker's net revenue is derived from these top three chains.

Marketing products via television and over digital devices (including Netflix and iTunes), the company spent $409.4 million on advertising in 2015, compared to $420.3 million and $398.1 million in 2014 and 2013, respectively.

Financial Performance

Hasbro's sales and profits have been steadily rising in recent years as demand for toys (especially preschool brands) has been buoyed by strong economic and population growth in North America and abroad.

The company's sales climbed 4% to $4.45 billion during 2015, mostly thanks to 10% growth in its US and Canada segment driven by strong sales of Nerf, Jurassic World, and Star Wars brands for boys. Double-digit preschool brand sales growth driven by the franchise Play-Doh brand and Jurassic World and Star Wars partner brands also played a large part in the company's top-line growth. While sales for girl brands shrank 18% for the year, sales for the Disney's Descendants, My littlest Pet Shop, and Disney Princess brands did manage to grow. Overseas, sales grew in the UK and Germany and declined in Russia, Brazil, and China due to unfavorable foreign currency exchange rates (excluding this factor, sales grew by double digits in international markets).

Solid revenue growth in 2015 drove Hasbro's net income up 9% to $451.84 million for the year. The company's operating cash levels jumped 22% to $552.45 million mostly on favorable working capital changes related to an increase in accounts payable and accrued liabilities, as well as from higher cash earnings.

Strategy

To ignite sales growth the toy maker is looking to revitalize its existing brands, while developing new ones on a global scale. In North America the company is looking to entertainment experiences such as movies, TV, publishing, and digital gaming to promote its brands. Beyond North America Hasbro seeks to expand in Eastern Europe and in emerging markets in Asia and Latin and South America. Some of its most recent international growth markets (as of early 2016) include the UK, Italy, Spain, and Mexico.

Hasbro recently extended its Marvel and Star Wars licenses when it signed deals for all properties through 2020. The move paid off big in 2015, as the toys and games company enjoyed 20% sales growth for its boy's brands with help from the Jurassic World, The Avengers: Age of Ultron, and Star Wars: The Force Awakens movie launches. In 2014, Hasbro also looked to its traditional brands for growth, launching a line of Nerf products for girls under the Nerf Rebelle banner as well as Doh Vinci branded arts and crafts products. It also introduced Nerf dog toys.

Hasbro also seeks growth from Discovery Family (formerly The Hub), its multi-platform joint venture (Hasbro owns 40%) with cable programming giant Discovery Communications. The children's TV channel offers family and educational programming targeted at children ages 11 and younger based on Hasbro's brands, including G.I. Joe, My Little Pony, and Scrabble.

Additionally, the company associated with fun maintains a long-term strategy to extend its brands into the digital world via long-term partnerships. To that end, the company teamed up with Electronic Arts (EA) to create video game versions of some of its classic board games, such as Monopoly, Scrabble, and Yahtzee. Titles are available for major platforms, including gaming consoles, mobile phones, and PCs. EA has a full line-up of games that incorporate the toy maker's classic brands.

Hasbro also hopes to capitalize on a licensing agreement with Sesame Workshop to make Sesame Street toys and games with the rights to the Elmo, Big Bird, and Cookie Monster names. Hasbro has also been busy enlisting more superheroes to bring rival Mattel and its Barbie down a notch. Via its partnership with Marvel Entertainment, the toy maker has access to some 5,000-odd Marvel characters (such as Fantastic Four, X-Men, Captain America, and Ghost Rider) thanks to a licensing agreement with Marvel (signed in 2006) for the sale of Marvel-branded toys and games.

Mergers and Acquisitions

In 2013 as way to continue expanding its brands into the digital world, Hasbro purchased a 70% stake in US-based mobile game developer Backflip. It will purchase the rest of the company if certain milestones are met.

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HASBRO, INC.

1027 Newport Ave
Pawtucket, RI 02861-2500
Phone: 1 (401) 431-8697
Fax: 1 (401) 727-5099

Stats

  • Employer Type: Public
  • Chairman, President, and CEO: Brian D. Goldner
  • Chairman, President, and CEO: Brian D. Goldner
  • EVP and CFO: Deborah M. Thomas

Major Office Locations

  • Pawtucket, RI

Other Locations

  • Chino, CA
  • Exton, PA
  • Providence, RI
  • Allen, TX
  • Grand Prairie, TX
  • Cuautitlan Izcalli, Mexico
  • Tepotzotlan, Mexico
  • Oslo, Norway
  • Newport, Wales
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