Hasbro: The boys are back in town
Something funny happened on the way to Frozen’s girl-themed dominance of the toy market. Boys!
Hasbro (HAS) reporting fourth quarter revenue got a big boost from a 21% increase in sales of boys’ toys.
Yahoo Finance’s Jeff Macke gives Hasbro kudos for coming up with a winning formula.
“What Hasbro did was go out and sell a lot of Nerf footballs, they had a lot of Transformer toys, they simply had a lot of things that worked for them,” he notes. “Good companies go ahead and make products that people want.”
Macke points out Wall Street likes what Hasbro is doing as well.
“It’s a tricky little market Hasbro has managed to pull off but they are the anti-Mattel (MAT) right now, and that’s working for traders,” he says. “It’s an easy trade to be a long Hasbro and be short a little bit of Mattel until they fix Barbie, which will be never, and just double down on the trade every time that you get a chance.”
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Macke feels Hasbro is showing that it’s not important for toymakers to be tied to hot movie, such as Disney’s (DIS) blockbuster, Frozen, which hasn’t been a big winner for its chief rival, Mattel.
“When you tie into a company like Disney, Disney tends to take all the profits,” he says. “They’re a little like Apple (AAPL) in that way. And I don’t recall the movie that Nerf footballs was tied into, and yet they sold a lot of them! It's all about making products that you need."
Macke feels that’s one reason why Hasbro is doing better than Mattel.
“When you look at Mattel, they’ve got all the tie-ins, they’ve got in all the movies, they’ve got no money to be made,” he notes. “Hasbro is making coin.”
And Mattel has lost the rights to make Frozen toys to none other than Hasbro, starting next year.
Overall, Hasbro’s revenue rose 1% to $1.3B, coming in a bit short of analysts’ estimates. The company blaming the strong dollar, which it says took a $75.4 million bite out of the top end of its ledger. Hasbro reporting that without the impact of foreign exchange, revenue would have been 7% higher.
Macke also believes despite all the interest in video games and electronic toys, real cars, trucks and dolls are not going away.
“There will always be a place for physical toys, he argues. “We live in a tactile world. We’re human beings. We like to touch things and move them and play with stuff. So you’ll never completely replace that.”
But Macke says while toys will be around…not necessarily everyone who makes them will be.
“The toy market won’t go away,” he says. “Bad toymakers will go away.”
