Longtime Hasbro CEO Brian Goldner readily admits the bankruptcy of Toys R Us this year hasn’t made life for the toymaker easy.
But Goldner thinks 2019 is poised to be different.
“It has been a disruptive year,” Goldner acknowledged to Yahoo Finance. “We still believe Hasbro will return to growth in 2019 — we have a great product lineup.” Goldner said toys tied to the Nerf brand — based on popular online game Fortnite and e-sports league Overwatch — will play a key role in driving the business. Further, toys related to new movies from franchises Transformers, Frozen and Star Wars should help to reignite growth next year, Goldner said.
Hasbro (HAS) plans to issue its 2019 guidance around the annual toy industry fair in February.
“Importantly, the 2019 investment case remains intact and Hasbro expects revenue growth and operating margin expansion in 2019, which we expect to be driven by rich content catalysts (Disney Princess, Star Wars), new product launches (Power Rangers, Overwatch) and easing headwinds from recent retail challenges and cost savings initiatives,” wrote Goldman Sachs analyst Michael Ng.
Toys, toys, toys
To Goldner’s point, this year has been disruptive for Hasbro and many toymakers absent Toys R Us.
Hasbro’s third quarter sales in 2018 dropped 12% from the prior year, with pressure felt across the U.S., Europe and Asia Pacific. Earnings came in at $2.06 a share, down from $2.09 a year ago. Wall Street expected $2.23 a share.
The company announced a plan to trim out $30 million to $40 million in annual costs by 2020 as it streamlines to move faster with more toys being sold online. As part of that, Hasbro will reportedly cut nearly 10% of its workforce.
Through September, U.S. toy industry sales were up a meager 2% to $11.6 billion, according to data from The NPD Group.
Goldner still thinks Hasbro doesn’t need to tie-up with longtime rival Mattel to gain greater scale. Rumors have swirled around Wall Street for years on this topic, with the deal likely giving the combined company increased sway with retailers such as Walmart, Target and Amazon.
“We have a lot of great brands in the portfolio — our fundamental focus is to reinvent, reignite and reimagine those brands,” Goldner said when asked about a potential deal with Mattel or others.
Brian Sozzi is an editor-at-large at Yahoo Finance. Follow him on Twitter @BrianSozzi
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