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.
Hasbro rings up about 50% of its sales in North America. Europe is its largest international market, accounting for nearly two-thirds of overseas sales. Other important foreign markets for the toy company include Latin America and the Asia Pacific Region. Hasbro has operations in emerging markets including Brazil, China, Czech Republic, Korea, and Colombia.
Sales and Marketing
Hasbro relies on a few customers for more than a third of its sales. Wal-Mart (with 16%), Toys R Us (19%), and Target (8%) are its top three major customers. In the US, approximately 59% of the toy maker's net revenue is derived from these top three chains.
Hasbro's revenues jumped 5% from $4.08 billion in 2013 to $4.28 billion in 2014. The growth for 2014 was fueled by a 20% bump from its boys segment, primarily from Star Wars toys. It also experienced a 20% increase in emerging markets, including, but not limited to, Russia, Brazil, and China.
Its profits surged 45% from $286 million in 2013 to $416 million in 2014, mostly due to a decrease in interest expenses and other costs. Hasbro's operating cash flow has fluctuated over the years; after declining in 2013, it went up 13% to $454 million in 2014.
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.
Hasbro is looking for 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.
Hasbro 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.
Hasbro doubled down on its Marvel and Star Wars licenses in 2014 when it signed deals for all properties through 2020. The company 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.
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.