Despite higher prices, people continued to spend on Nerf blasters, Power Rangers action figures and Magic the Gathering cards, helping Hasbro overcome rising costs for materials and freight, the company said Tuesday.
Hasbro said second-quarter revenue was up 1 percent from a year earlier, but profits grew 10 percent, exceeding analyst expectations as price increases and demand overcame higher costs and currency losses.
Hasbro’s earnings report is a promising sign for other companies that also sell discretionary products, as consumers come under pressure from rising inflation and higher costs erode corporate profit margins. Many of those companies will report their quarterly results in the coming weeks.
Consumer prices in the United States rose 9.1 percent in June, the fastest pace in 40 years. But that didn’t stop some shoppers from opening their wallets, and retail sales rose more than expected in June.
Hasbro raised prices in the second quarter, helping the company make up for higher costs for materials such as paper and plastic, Deborah Thomas, Hasbro’s chief financial officer, said during an interview with analysts. The move could boost profit margins in the third and fourth quarters even more, she said.
Hasbro’s toys and games “are mostly small luxuries that consumers value quite highly,” Chris Cocks, the company’s CEO, said during the conversation. During economic downturns, fans of games like Magic the Gathering and Dungeons & Dragons, in particular, are “very resilient,” he said, “with a deep well of savings and a great deal of passion.”
The company’s business unit, which includes Magic the Gathering and Dungeons & Dragons, had its best-ever quarter for sales, $420 million, up 3 percent from a year earlier.
Hasbro recently teamed up with The New York Times to develop a board game based on Wordle.
In what will likely be a theme among other multinational companies, Hasbro’s sales were held back by a strong dollar, the company said, especially ahead of sales in Europe, where the euro recently fell to parity with the US dollar for the first time in 20 years. . year. Converting sales from other currencies to dollars caused second quarter sales to drop nearly $33 million, Hasbro said.
The toymaker also said the Russian invasion of Ukraine would affect the results this year. Last year, $115 million of the company’s sales came from Russia. “We will not have this revenue and the associated operating profit in 2022,” said Mr Cocks.
Hasbro’s shares rose nearly 3 in early trading before settling for a gain of about 1 percent. Competing toy maker Mattel will announce its latest quarterly figures on Thursday.