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February 2023 | Vol. XXII - No. 2

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Hasbro and Mattel: A Look at Two of the World's Largest Toy Companies

By: Laura N. Larsson
2/15/2023

The toy industry is a vast and dynamic marketplace, with a multitude of brands offering a diverse range of products to children and adults alike. Two of the largest and most well-known players in this industry are Hasbro and Mattel. Both companies have been around for decades and have established themselves as leaders in the global toy market. In this article, we will take a closer look at Hasbro and Mattel, their history, and some of their top-selling toys.


Hasbro is an American multinational toy and board game company, founded in 1923. It is one of the largest toy makers in the world, with popular brands such as Transformers, My Little Pony, Monopoly, and many others. Hasbro's Transformers toy line has been popular for many years, thanks to the success of the Transformers movies and the continued popularity of the Transformers brand. The success of the My Little Pony franchise, through the TV show and associated merchandise, has also contributed to the popularity of My Little Pony toys.


Mattel, on the other hand, is another large American multinational toy manufacturer, founded in 1945. It is best known for its Barbie dolls and Hot Wheels toy cars. Barbie dolls have been a staple of the toy industry for decades and have maintained their popularity due to continuous updates and variations of the dolls, as well as successful marketing campaigns targeted towards girls. Hot Wheels toy cars have been popular for generations due to their collectibility and the excitement of racing and customizing the cars. Mattel also has a presence in the educational toy market, with popular Fisher-Price toys for children.


The popularity of toys can be influenced by various factors such as media franchises, consumer preferences, marketing campaigns, and cultural trends. In general, toys that offer a combination of play value, collectibility, and brand recognition tend to be popular and successful in the market. Hasbro and Mattel are both successful companies in their own right, with a long history of delivering quality toys to consumers around the world.


This article will be updated within a few weeks.


Hasbro's Financial Results: Fourth Quarter 2022 Selected Preliminary Results

  • Preliminary fourth quarter 2022 revenue of approximately $1.68 billion, down 17% year-over-year; down approximately 14% in constant currency.

  • Wizards of the Coast and Digital Gaming segment revenue of approximately $339 million, up 22% year-over-year; Consumer Products segment revenue of approximately $1.0 billion, down 26% year-over-year; and Entertainment segment revenue of approximately $335 million, down 12% year-over-year.

  • Preliminary operating loss margin of 8.3% to 7.5%; Preliminary adjusted operating profit margin of 15.8% to 16.0%, excluding total pre-tax charges of approximately $300 million associated with changes in entertainment and business plans as part of the Blueprint 2.0 strategy, approximately $21 million in pre-tax charges related to amortization of costs from the eOne acquisition, and cash charges of approximately $78 million associated with workforce reductions and related fees associated with the execution of the Blueprint 2.0 strategy.

  • Preliminary earnings loss per share of $1.00 to $0.93; Preliminary adjusted earnings per diluted share of $1.29 to $1.31, excluding the impact of the charges set forth above.

Full-Year 2022 Selected Preliminary Results

  • Preliminary full-year 2022 revenue of approximately $5.86 billion, down 9% year-over-year; down approximately 6% in constant currency.

  • Wizards of the Coast and Digital Gaming segment revenue of approximately $1.33 billion, up 3% year-over-year; Consumer Products segment revenue of approximately $3.57 billion, down 10% year-over-year; and Entertainment segment revenue of approximately $959 million, down 17% year-over-year and down 12% excluding $65 million of revenue associated with the music business which was sold in 2021.

  • Preliminary operating profit margin of 6.7% to 7.0%; Preliminary adjusted operating profit margin of 15.7% to 15.8%, excluding total pre-tax charges of approximately $520 million, including the Q4 charges described above and $120 million recognized through the third quarter 2022.

  • Preliminary earnings per diluted share of $1.40 to $1.46; Preliminary adjusted earnings per diluted share of $4.43 to $4.45, excluding the impact of the charges set forth above.

Leadership and Organizational Changes: Hasbro

In October 2022, the Company announced a goal of delivering $250-300 million in annualized run-rate cost savings by year-end 2025. In alignment with this program’s objectives, the Company is undertaking organizational changes that will result in the elimination of approximately 1,000 positions from its global workforce this year, or approximately 15% of global full-time employees. The changes will include a new organizational model, commercial alignment, and leadership changes that the Company will discuss in more detail on its upcoming earnings conference call.

"The elimination of these positions will impact many loyal Hasbro employees, and we do not undertake this process lightly. However, the changes are necessary to return our business to a competitive, industry-leading position and to provide the foundation for future success," said Cocks.

Mattel Reports Fourth Quarter and Full Year 2022 Financial Results

Fourth Quarter 2022 Highlights Versus Prior Year

  • Net Sales of $1,402 million, down 22% as reported, or 19% in constant currency

  • Gross Margin of 43.0%, a decrease of 630 basis points; Adjusted Gross Margin of 43.1%, a decrease of 620 basis points

  • Operating Income of $79 million, a decrease of $178 million; Adjusted Operating Income of $79 million, a decrease of $185 million

  • Net Income of $16 million, a decrease of $210 million

  • EPS of $0.04 compared to $0.63 per share; Adjusted EPS of $0.18 compared to $0.53 per share

  • Adjusted EBITDA of $158 million, a decrease of $163 million

Full Year 2022 Highlights Versus Prior Year

  • Net Sales of $5,435 million, flat as reported, or up 3% in constant currency

  • Gross Margin of 45.7%, a decrease of 240 basis points; Adjusted Gross Margin of 45.9%, a decrease of 230 basis points

  • Operating Income of $676 million, a decrease of $54 million; Adjusted Operating Income of $689 million, a decrease of $75 million

  • Net Income of $394 million, a decrease of $509 million; prior year included a non-cash benefit of $541 million resulting from the release of valuation allowances on deferred tax assets

  • EPS of $1.10 compared to $2.53 per share; Adjusted EPS of $1.25 compared to $1.30 per share; prior year as reported EPS included a benefit of $1.51 per share resulting from the release of valuation allowances on deferred tax assets

  • Adjusted EBITDA of $968 million, a decrease of $39 million

  • Company announces 2023 guidance

  • Company raises Optimizing for Growth cost savings program goal to $300 million

  • Share repurchases expected to resume in 2023, with approximately $200 million remaining under the Company’s current authorization

 




The Securities and Exchange Commission, announced, on Oct. 21, 2022 that California-based Mattel Inc. has agreed to pay $3.5 million to settle charges relating to misstatements in its third and fourth quarter 2017 financial statements. Separately, the SEC is initiating litigation against Joshua Abrahams, a former audit partner at PricewaterhouseCoopers LLP, or PwC, to determine whether he engaged in improper professional conduct and violated auditor independence rules.


According to the SEC’s order, Mattel understated the tax-related valuation allowance for the third quarter of 2017 by $109 million and overstated the tax expense for the fourth quarter of 2017 by the same amount. As a result, Mattel’s third quarter and fourth quarter 2017 net loss and net loss per share were understated by 15% and overstated by 63%, respectively. In addition, the SEC’s order finds that, at the time, Mattel had no internal control specifically related to calculating a valuation allowance. As explained in the order, until Mattel’s November 2019 restatement, the $109 million tax expense error remained uncorrected, and the lack of internal control for financial reporting related to the error remained undisclosed. As alleged, neither Mattel’s CEO nor audit committee was informed of the $109 million error.
Writer's Bio: Since 2012, Laura has spent much of her time around children conducting research in development and growth of children. Her diverse experience around children has enabled her to see firsthand how playing with toys can be one of the richest sources of learning and communication for kids. Read more articles by this author


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