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Hasbro Collaborates With Rhett & Link to Fight Sales Slump

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Hasbro, Inc. HAS has been grappling with constricted consumer demand and indented sales, like most other U.S.-based traditional toymakers. In order to overcome from this situation, the company is heavily relying on partnerships and innovation across its product line.

After partnering with Quidd and acquiring Power Rangers, the company declared its multi-year partnership with the comedy duo Rhett & Link, which is expected to boost the popularity of Hasbro’s games. By collaborating with the duo, Hasbro aims to co-develop and uphold unique gamesand events. Also, Rhett & Link, having more than 21 million subscribers, can provide Hasbro with a platform that will showcase the company’s unique product line.

Vigorous Partnershipsarethe Need of the Hour

The collaboration with Rhett & Link falls under Hasbro’s strategy of extending partnerships, and focusing on greater distribution of its iconic products to drive incremental sales. As it is, Rhett & Link is highly popular owing to its YouTube comedy series, Good Mythical Morning. The comedy duo recorded more than 5 billion views since its video debut in 2006. By partnering with this already popular medium, Hasbro plans to create unique content and launch new games on Rhett & Link’s daily episodic YouTube series.

Notably, Hasbro has been one of the early movers to gauge the impact of Toys “R” Us bankruptcy amid peers. The U.S. toy industry dealt a heavy blow when the country’s largest independent toy seller, Toys "R" Us filed for bankruptcy last September. Adding a nail to the coffin, Toys “R” US said that it is liquidating its entire U.S. operation, leaving toymakers like Hasbro, Mattel MAT and JAKK Pacific JAKK in a soup as these used to derive a considerable portion of their revenues from sales to Toys "R" Us. Although retailers like Amazon AMZN came to the rescue of these toymakers, they currently don’t have shelf spaces as big as Toys “R” Us, which is a concern.

Hasbro, being prescient about such disarray, has been trying to curb its dependence on Toys “R” Us. The company has been testing waters with new distribution methods, development of digital play components and exploration of ventures with other industries. The company has diverse retail channels such as drugstores and dollar chains, and big mass market retail. It also has a robust online strategy in place that includes interactive content and virtual immersive experiences. It has a five-year agreement with Paramount to enhance storytelling and content capabilities. The company also invested in Boulder Media, its animation studio, and cultivated its digital capacities to drive sales.

What’s the Fate of Hasbro?

Well, while we appreciate Hasbro’s relentless efforts to chalk out counter strategies and adapt to changing demand conditions, we remain apprehensive about the fact that Hasbro has not been able to revive sales yet. In fact, owing to the liquidation, sales of Hasbro across every brand declined in the first quarter of 2018. We believe that the effect of this liquidation will linger further as Toys “R” Us was the last major chain fully dedicated to selling toys. However, it is yet to be seen if the company’s efforts to turnaround through collaborations and product innovation could shore up its flagging fortunes.

Meanwhile, a look at Hasbro’s price trend reveals that the stock has witnessed an unimpressive run on the bourses in the past year. Shares of the company have lost 16.5% against the industry’s rally of 24.7% in the same time frame. This reflects investors’ pessimism on the stock, given uncertain sales environment. Moreover, over the past two months, earnings estimates for the current quarter and year have been revised downward by 29.6% and 6%, respectively, reflecting analysts’ doubt surrounding the company’s future earnings potential.

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