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Hasbro Links Round-up: Q1 Revenue, Quarterly Gaming Crate, and Corporate Citizen Status

W. Eric Martin
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Hasbro has issued a revenue report for Q1 2017, noting that revenues are up 2% — $849.7 million vs. $831.2 million — compared to Q1 2016. Net earnings compared to Q1 2016 are up 41%: $68.6 million vs. $48.8 million. These increases follow Hasbro's record-setting 2016, the first year that it topped $5 billion in net revenues. From the press release:

Quote:
"Our first quarter results are in line with our previously communicated expectations and we are well positioned to execute against 2017's rich content slate and diverse new initiatives," said Brian Goldner, Hasbro's chairman and chief executive officer. "Revenue grew in the quarter and we drove strong consumer takeaway at retail, both compared to a robust first quarter last year and with a shift of Easter into this year's second quarter. Over the coming quarters, we are supporting significant new initiatives including major theatrical films for both Franchise and Partner Brands."

Quote:
Hasbro Gaming posted 43% revenue growth to $142.9 million driven by Hasbro's diverse gaming portfolio. The strong revenue increase was led by several new games, including SPEAK OUT, TOILET TROUBLE and FANTASTIC GYMNASTICS, digital gaming, and several other gaming brands, including DUNGEONS & DRAGONS, BOP-IT and PIE-FACE. Hasbro's total gaming category grew 10% to $253.3 million.

Hasbro divides its products into four brands — Franchise Brands, Partner Brands, Hasbro Gaming, and Emerging Brands — and some of its game sales hide in the Franchise Brands category, as noted elsewhere in the press release: "Hasbro's total gaming category, including all gaming revenue, most notably MAGIC: THE GATHERING and MONOPOLY, which are included in Franchise Brands in the table above, totaled $253.3 million for the first quarter 2017, up 10%, versus $231.1 million in the first quarter 2016. Hasbro believes its gaming portfolio is a competitive differentiator and views it in its entirety."

• To take advantage of its "competitive differentiator", in mid-2017 Hasbro will debut the Hasbro Gaming Crate. Four times a year, Hasbro will ship subscribers who pay the $50 fee either a party or family-themed game crate that contains three games. An excerpt from a Fortune article:

Quote:
"We've seen the subscription trend and how strong it has become outside of our industry and we thought 'Gamers are into their games and they want to try new games all the time,' said Jonathan Berkowitz, senior vice president of marketing for Hasbro Gaming, in an interview with Fortune. "It is a perfect marriage for the gaming category." ...

Berkowitz explained that the party themed boxes will incorporate more "edgy" games that are ideal for adults, while the family crate is for all different ages and more inclusive. Hasbro built a new separate team within the broader Hasbro Gaming segment that will focus exclusively on the Hasbro Gaming Crate service. The idea is that all the games that will be shipped will be new — so consumers that order the crate won't be getting boxes of Candy Land and Jenga shipped to their homes.

The service is also a way for Hasbro to innovate at a faster pace than is typical for the industry.

In an interview with CNBC's Jim Cramer, Hasbro Chairman and CEO Brian Goldner referred to the Hasbro Gaming Crate as "profitable experimentation" since those who buy the Crates are encouraged to give feedback on the titles, which might then make it into general distribution depending on the results.

What might you find in these new games? Nothing has been announced, but the Fortune article includes this paragraph about how Hasbro turned around its games division after initially trying — and failing — to incorporate "tablet functionality" into its existing game brands:

Quote:
One critical source of inspiration has been viral videos. Hasbro saw the web-driven buzz around the Pie Face game and bought the rights to manufacture and distribute the game after it became a viral hit. Other games that have been inspired by viral videos have included Egged On (based on a gag utilized by late-night host Jimmy Fallon), Flip Challenge (inspired by the bottle flipping trend on YouTube), and Speak Out (also inspired by viral web videos).

CR Magazine has ranked Hasbro first in its annual list of the "100 Best Corporate Citizens", with the companies being ranked in these seven categories: environment, climate change, employee relations, human rights, corporate governance, financial performance, and philanthropy and community support. The "CR" in the magazine's title stands for "corporate responsibility". (ranking PDF)

• By chance, I recently ran across a 2016 article in The Times, a UK-based newspaper, that detailed how "women housed by the Good Shepherd Sisters in Waterford packaged board games for the global toy franchise Hasbro in return for 'pocket money' as recently as 2012". Excerpts from the article:

Quote:
"In the 1980s, Hasbro entered into an agreement with the Good Shepherd Sisters in Waterford to provide materials for packaging by our residents," said the Good Shepherd Sisters in a statement. "The residents who participated in this activity were regularly given what was then known as their 'Hasbro money envelope'."

The Good Shepherd Sisters said that the order "in no way profited from this commercial relationship with Hasbro, which ended in 2012".

A former factory employee from Hasbro Ireland said her mother had been housed by the Good Shepherd Sisters and had also packaged Hasbro toys, but for "pocket money rather than wages".

The former employee, who asked not to be named, also claimed that the women who worked on the site of the Good Shepherd convent in Waterford worked longer hours than employees in Hasbro’s Waterford factory

Quote:
When asked about its business relationship over three decades with the Good Shepherd Sisters in Waterford, [Hasbro] said that it had no direct commercial involvement with the order. Instead, the company said, it had a business relationship with Rehab, a charity that aims to help those with a disability in the workforce.

Julie Duffy, a spokeswoman for Hasbro Inc, said: "Rehab in Waterford, many years ago, approached Hasbro to provide small work tasks for the clients they serve. Hasbro viewed this as a community service."

Duffy said that, between 1999 and 2008, Hasbro paid Rehab approximately €25,000 a year.
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