A Tale of Two Toy Makers: Mattel and Hasbro
Hasbro Inc. (HAS) has seen a general upward trend in its stock price for the past five years. The Pawtucket, Rhode Island-based board game and entertainment company hopes to succeed in its long-term plan of becoming more than just a toy company, as it has a market price of around $104 per share as of July 23, 2018. Habro’s main rival, El Segundo, California-based Mattel Inc. (MAT) has disappointed with an opposite trajectory, from $43 per share in July, 2013 to $16.58 on July 23, 2018.
With the giant toy retailer Toys ‘R’ Us filing for bankruptcy last September and liquidation plan for all of its U.S. stores announced in March 2018, both of the two companies’ stocks are in red YTD, with Hasbro doing better than Mattel.
On April 19, 2018, Mattel announced that Ynon Kreiz, former Maker Studios executive, will replace Margaret Georgiadis as the CEO of Mattel. Georgiadis is stepping down from the position only 14 months after she started, as the stock price of Mattel has almost halved in this period due to weak demand and pressure from the bankruptcy of its top customer Toys ‘R’ Us.
On July 23, 2018, Hasbro reported Q2 earnings with revenues of $904.5 million. Its U.S. and Canada segment is down 7% in revenue from the same point last year.
The board game and action figure powerhouse has a market cap of $13.3 billion as of July 23, 2018. In FY 2017, demand for digital games worked to nearly double profit for the company’s entertainment and licensing business, which saw full year revenues of $5.21 billion. In October 2017, Hasbro opened up a movie studio (Allspark Pictures) in a bid to create a cinematic universe in the vein of Marvel Studios.
“We’ve positioned Hasbro to unlock the full potential of our brands, investing significantly across the brand blueprint. We’re still in the early stages of realizing our ambitions” said Hasbro’s Chief Executive Officer (CEO) Brian Goldner. (See also: Hasbro Wants Its Own Movie Universe.)
The owner of Barbie, Fisher-Price and American Girl brands has had a rough few years. During their Q1 earnings call, Mattel announced that worldwide net sales were down 4%. Mattel has a current market cap of $15.9 billion as of July 23, 2018, and has seen earnings and stock prices go south for years. Mattel still has some of the most popular brands on the earth, but lost its lucrative Disney princess brand to Hasbro in 2015.
“We have been of the view that ’17-’18 could see pickup in coalition for what remains a fragmented toy market. Low barriers to entry & hit-driven nature of then industry have been primary drivers behind fragmentation.” (See also: UBS: It’s About Time for a Mattel-Hasbro Merger.)
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