Yahoo Finance Emerging Market Growth Aids Hasbro (HAS), High Costs Ail
Hasbro, Inc. HAS is capitalizing on strong expansion in emerging markets, the success of recent product launches and heightened demand in the gaming sector. The company holds a positive outlook for its growth prospects in the coming three years. Nonetheless, elevated costs continue to be a focal point of concern.
Let’s delve deeper.
Growth Drivers
Beyond advancing its brands and capitalizing on strategic toy lines and licenses, Hasbro aims to expand its global footprint by venturing into emerging markets in Eastern Europe, Asia, and Latin America. These burgeoning markets present substantial opportunities for revenue expansion, outperforming developed markets.
Hasbro's investments in advertising and brand-building efforts have notably contributed to its revenue stream. Strong improvement has been witnessed in Asia-Pacific and Latin America. Management envisions double-digit growth in emerging markets over the next few years. Emphasizing innovation in products, entertainment and market share gains, Hasbro remains committed to its five-year plan (2018 to 2023-24), particularly in doubling its Wizards business.
Maintaining a commitment to innovation, Hasbro has forged a strategic partnership with Paramount to elevate storytelling and content capabilities. Additionally, it has directed investments into Boulder Media, its animation studio, bolstering digital capacities to stimulate sales.
The ongoing release of Transformers Franchise across various entertainment mediums, including movies, television and digital platforms, underscores Hasbro's dynamic approach. With a robust and forward-looking plan for Transformers franchise spanning the next decade, Has anticipates substantial revenue growth.
Hasbro, which share space with Mattel, Inc. MAT, JAKKS Pacific, Inc. JAKK and Activision Blizzard, Inc. ATVI, is witnessing strong gaming demand. It has a supreme gaming portfolio, and it is refining gaming experiences across a multitude of platforms like face-to-face gaming, tabletop gaming and digital gaming experiences in mobile. Given a strong product lineup and a greater focus on entertainment backed products, Hasbro's Entertainment and Licensing segment is poised for growth.
HAS is optimistic about its growth opportunities over the next three years. It anticipates operating profit growth of 50% over the same time frame. It also has plans to further increase its operating profit margin to 20% by 2027.
Additionally, management noted that its Operational Excellence program will deliver $250-$300 million in run-rate cost savings by the end of 2025. By 2023 end, it expects cost savings of $150 million.
Concerns
Hasbro's initiatives including product launches and a shift toward more technology-driven toys for reviving its brands and boosting sales are likely to drive profits in the long term. However, costs related to those initiatives might prove detrimental in the near term. It has shouldered high expenses with respect to freight, product costs, sales allowances, and various toy and gaming products closeouts.
For fiscal 2023, the company expects revenues to decline 3-6% year over year. Segment wise, it envisions revenues in Consumer Products to decline year over year (at cc) in the mid-single digits. In fiscal 2023, it projects Entertainment revenues to plunge 25-30% year over year. Adjusted operating margin is expected to dip on account of D&D film impairment and industry strikes.
A Brief Discussion About Abovementioned Stocks
Mattel is benefiting from product portfolio expansion strategies across its key brands, Optimizing for Growth program and solid demand for Hot Wheels. Also, initiatives to capture the full value of its IPs and transform itself into a high-performing toy company bode well.
JAKKS Pacific is gaining from the FOB business model, strategic acquisitions and a solid international footprint. Also, its focus on innovation, and collaborations with popular brands and movie franchisees bode well. The company realizes the importance of online retailing and shifted its focus to boosting online sales
Activision’s top line is expected to benefit from an expanding user base of Call of Duty, Hearthstone, World of Warcraft and Candy Crush franchises. This is expected to boost in-games spending, thereby driving net bookings and top-line growth in the near term.
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Activision Blizzard, Inc (ATVI) : Free Stock Analysis Report
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