The Hasbro Company is an American toy and board game manufacturer. In terms of revenue, it is the largest toy maker in the world. The company’s products are sold in over 150 countries.
According to Hasbro on Tuesday, people continued to spend on Power Rangers action figures, Nerf blasters and Magic the Gathering cards despite higher prices, helping the company overcome rising costs for materials and freight.
Hasbro’s revenue for the second quarter increased 1 percent from a year earlier, but profit expanded by 10 percent, exceeding analyst expectations as price increases and demand were offset by higher costs and currency losses.
Consumers are experiencing a squeeze due to rising inflation, while higher costs are eating into corporate profit margins, making Hasbro’s earnings report a positive sign for other companies that sell discretionary products. In the coming weeks, many of those companies will report their quarterly results.
Hasbro is doing well this year despite a general slowdown in the gaming industry. This can be attributed to a steady stream of new releases. Analysts claimed that the release of an expansion set for “Magic: The Gathering” in the second quarter boosted sales for both the tabletop and online versions of the game.
U.S. consumer prices rose by 9.1% in June, which is the fastest pace in the last 40 years. This didn’t stop people from shopping though, with retail sales rising beyond expectations in June.
The cost of materials for Hasbro products, such as paper and plastic, increased, Hasbro’s chief financial officer said in a conference call with analysts. In response, Hasbro raised prices in the second quarter and those prices now appear to be more than making up for the increased cost. She believes the move will boost the company’s profit margins even more in its third and fourth quarters.
The Hasbro’s products are “tend to be small luxuries that consumers value pretty highly,” Chris Cocks, the company’s CEO said on the call. Games like Magic the Gathering and Dungeons & Dragons are resilient during economic downturns, he said, having accumulated large reserves of savings and fueled by large volumes of devotion.
Magic the Gathering and Dungeons & Dragons, the company’s business units, recorded their best quarter ever, with $420 million, up 3 percent from a year earlier.
New York Times and Hasbro recently teamed up to develop a Wordle-based board game.
Hasbro said its revenue was held back, as it is likely to be a theme at other multinational companies, by the strong dollar. This is particularly true for European sales, where the euro recently fell to parity with the dollar for the first time in 20 years. A report by Hasbro revealed that, out of their own currencies, they made nearly $33 million less in the second quarter than they had expected.
Last year, of the company’s revenue, $115 million came from Russia. “We will not have this revenue and associated operating profit in 2022,” Mr. Cocks said.
As early trading proceeded, Hasbro’s shares soared nearly 3 percent before settling at about a 1 percent gain. Mattel, which is Hasbro’s major rival, will report its latest quarterly earnings on Thursday.