Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Hasbro shares are slipping despite strong earnings and maintained outlook.
Speaker 2: The company doubling down on gaming and digital franchises while
Speaker 2: navigating tariff pressures and softer consumer spending across the toy industry.
Speaker 2: The CEO, Chris Cox, joins us now and Chris, it's
Speaker 2: great to have you on the program. Great to talk
Speaker 2: Hasbro Again. I wonder if there's a risk that many
Speaker 2: investors don't really understand your business model and the products
Speaker 2: in which you see the most growth, since they're concerned
Speaker 2: about more concerned about maybe the petroleum intensive toys with
Speaker 2: which they associate normally Hasbro and the industry.
Speaker 1: Yeah, well, i'd certainly say we have some exposure to petroleum,
Speaker 1: but it's relatively light. The majority of our businesses games,
Speaker 1: which are made of paper and frank frankly domestically so,
Speaker 1: and then licensing and digital, which.
Speaker 3: Is just bits and btes.
Speaker 1: So you know, that's the vast majority of our business
Speaker 1: and the vast majority of where our growth has been
Speaker 1: coming from. And you know, you can never make promises
Speaker 1: and guarantees about the future, but when you look at
Speaker 1: a business like Magic It's grown on average sixteen percent
Speaker 1: per year for the last ten years, and just clocked
Speaker 1: in over twenty percent in our first quarter, so we're
Speaker 1: starting off the year pretty good. Yeah.
Speaker 2: Twenty six percent was the growth at Wizards, which, because
Speaker 2: I'm familiar with the business, I have been at your
Speaker 2: headquarters wizards headquarters in Seattle as well as your headquarters
Speaker 2: here on the East Coast, I understand how much that
Speaker 2: accounts for. I think more than half of quarterly revenue
Speaker 2: and growing at a strong clip. Have investors just misunderstood
Speaker 2: the story of Hasbro.
Speaker 3: I'm not sure. I don't think you're just looking for us.
Speaker 2: I'm looking at the nine percent or now seven and
Speaker 2: a half percent drop and wondering why the selloff. You know,
Speaker 2: we're worried about inflation, we're worried about the consumer, but
Speaker 2: it seems like those who are buying your IP continue
Speaker 2: to do so well.
Speaker 1: I mean, I would look at a down day like
Speaker 1: today as a buying opportunity. Frankly, you know, I think
Speaker 1: we have a lot of strong structural advantages. You know,
Speaker 1: when you think about Hasbro, you need to think about
Speaker 1: it being a collector's gaming and IP company, and those
Speaker 1: are all growth businesses. You know, we frame our opportunity
Speaker 1: in terms of audience and category in an acronym called
Speaker 1: gem squared, and so those are categories that are gaming driven,
Speaker 1: entertainment driven, multi purchase, and multi generational. In twenty twenty
Speaker 1: five categories that we define as gem squared, we're up
Speaker 1: twenty two percent versus the rest of the toy industry
Speaker 1: was down three percent. And of most of our capital,
Speaker 1: most of our brands, most of our growth is invested
Speaker 1: behind those gem squared insights and those gem squared brands.
Speaker 1: You saw it in Q one, where you know, we
Speaker 1: grew thirteen percent. You see it in our guidance where
Speaker 1: we're projecting, you know, kind of a mid single digit
Speaker 1: growth rate for the company, and you see it in
Speaker 1: the bottom line where our profits have never been stronger,
Speaker 1: and our profit growth and our profit margins are some
Speaker 1: of the best in the industry.
Speaker 4: Chris, I think, if I may, at least, it seems
Speaker 4: like the analyst communities reaction is kind of what you're
Speaker 4: talking about, this idea that your growth has been so
Speaker 4: strong thirteen percent in the first quarter. I mean, look
Speaker 4: at last year, the success and growth of Magic the gathering.
Speaker 4: Why is there like a slight step down to the
Speaker 4: single digits. What sort of changes as the year goes
Speaker 4: on that you don't get that like, you know low
Speaker 4: teens growth and success.
Speaker 3: That you've seen. Well, I think we're a diversified business.
Speaker 1: I think, you know, we always start the year with
Speaker 1: a tempered outlook.
Speaker 3: About what we think the business can do.
Speaker 1: And you know, we like to we like we like
Speaker 1: to under promise and over deliver, which is something that
Speaker 1: I think we've done now for nine maybe ten quarters
Speaker 1: and consistent, consistently. I think that's good for investors. I
Speaker 1: think that's good for our internal teams, and I think
Speaker 1: that's good for our fans.
Speaker 2: We have, I guess a bit of a fanboy and
Speaker 2: our producer, Will Shaker in the control room, he's writing,
Speaker 2: tell me about the movies, guys. So you have a
Speaker 2: big theatrical slate coming right, Star Wars, another edition there,
Speaker 2: Toy Story. I think it's the fifth one, Spider Man Avengers.
Speaker 2: What do you expect from that in terms of toy sales?
Speaker 2: Which are you know the obviously the resin the petroleum
Speaker 2: based products are getting hit with cost pressures, but I
Speaker 2: would imagine you'll have some pricing power as well here, Yeah, yeah.
Speaker 1: And we do you know our we think one hundred
Speaker 1: dollars barrel oil has about a thirty million dollar cost
Speaker 1: head wind for us, But I think you have to
Speaker 1: look at that in the context of a business that
Speaker 1: generates one point four to one point four or five
Speaker 1: billion dollars in ebit up per year. So it's a
Speaker 1: relatively manageable set of cost pressures for us that we
Speaker 1: can offset inside of a large and diversified set of operations.
Speaker 3: And I think you're right. Our entertainment slate is second
Speaker 3: to none.
Speaker 1: We've got the Mandalorian and Grogu opening this weekend, the
Speaker 1: first big new Star Wars movie, I think in seven years,
Speaker 1: you know. So far, toy sales for that have been
Speaker 1: selling it at a robust clip in including one of
Speaker 1: the coolest toys we've ever made, the Ultimate Grogu, which
Speaker 1: is a five hundred and ninety nine dollars super high
Speaker 1: end animatronic collectible. Then we have a toy Story five,
Speaker 1: which is always great for our official company mascot mister
Speaker 1: Potato Head and his family.
Speaker 3: Those sales always go through the roof on that.
Speaker 1: Then we have Spider Man brand New Day, which first
Speaker 1: Spider Man movie in a couple of years, and you know,
Speaker 1: based on early previews that we've seen, it looks fantastic.
Speaker 3: And then we're going to cap the year off.
Speaker 1: With the Invengers Doomsday, which is like bringing back all
Speaker 1: the original cast and really propelling that story forward. So
Speaker 1: I think from an entertainment perspective, certainly in the short
Speaker 1: term we look fantastic, and I think the story only
Speaker 1: gets better in the midterm. You know, next year we
Speaker 1: have the Star Wars fiftieth anniversary, we have Star Wars Starfighter,
Speaker 1: we have more Marvel Superheroes films, and then Hasro's entertainment
Speaker 1: slate is just starting to cook. You know, we're going
Speaker 1: to have you know, I think we have something like
Speaker 1: sixty projects in the hopper, and next year we'll have
Speaker 1: the debut of our new Magic animated series, which I
Speaker 1: think will help propel Hasbro's biggest and most profitable brand
Speaker 1: to all new levels.
Speaker 2: You should have, by the way, some kind of golden
Speaker 2: ticket game where the winner gets to see your headquarters,
Speaker 2: the Wizards headquarters on the West Coast, and they get
Speaker 2: to own it.
Speaker 3: And run it.
Speaker 2: It's an amazing it's an amazing place. I was really
Speaker 2: excited to get to spend some time there. I want
Speaker 2: to just ask you finally about Monopoly because it's an
Speaker 2: age old property obviously, and you've done well online and
Speaker 2: digitally with Monopoly Go. But Will says there's potentially a
Speaker 2: live action feature film coming out. Can you tell us
Speaker 2: about that?
Speaker 3: Oh?
Speaker 1: Yeah, there's a live action feature film which we're partnering
Speaker 1: with Lionsgate and Margaret Robbie's Lucky Chat production that's been
Speaker 1: in development now for a year or so, so that
Speaker 1: should be pretty exciting. And certainly Margo is a fantastic talent,
Speaker 1: both creatively and as an actress. And then you know,
Speaker 1: Monopoly Go continues to cook with gas. You know, that's
Speaker 1: the biggest mobile game in history. It continues to deliver.
Speaker 1: Like to put in context what Monopoly Go does for us,
Speaker 1: it's basically the equivalent of two blockbuster movies worth of
Speaker 1: licensing revenue per year to us. And that's an annuity
Speaker 1: that's not just a one and done. That's going to
Speaker 1: be an annuity that's going to stick with us for
Speaker 1: a very long time. And I think it just shows
Speaker 1: some of the innate advantages inside of Hasbro. We're very diversified.
Speaker 1: We have toys, we have games, we have collectibles. We
Speaker 1: have a huge digital game business in licensing, a growing
Speaker 1: one in first party publishing, and then we have this
Speaker 1: great licensing business overall that you know, spans over one
Speaker 1: thousand partnerships, over five thousand collaborations, and you know, is
Speaker 1: like combined when you think about digital plus our physical licensing,
Speaker 1: it creates a merchandising of sixteen to eighteen billion dollars
Speaker 1: of Hasbro branded merchandise per year in addition to the
Speaker 1: you know, the fourish billion dollars that Hasbro generates per year.
Speaker 4: You know, I would say, like, I don't know if
Speaker 4: a Monopoly movie is for me, But what I said,
Speaker 4: a Dungeons and Dragons movie wasn't for me, and I
Speaker 4: loved it and it was great, So maybe that says something. Chris,
Speaker 4: always a pleasure to have you on. Hasboro's CEO. Chris
Speaker 4: Cox