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Hasbro shares are slipping despite strong earnings and maintained outlook. The company doubling down on gaming and digital franchises while navigating tariff pressures and softer consumer spending across the toy industry. The CEO, Chris Cox, joins us now and Chris, it's great to have you on the program. Great to talk
Hasbro Again. I wonder if there's a risk that many investors don't really understand your business model and the products in which you see the most growth, since they're concerned about more concerned about maybe the petroleum intensive toys with which they associate normally Hasbro and the industry.
Yeah, well, i'd certainly say we have some exposure to petroleum, but it's relatively light. The majority of our businesses games, which are made of paper and frank frankly domestically so, and then licensing and digital, which.
Is just bits and btes.
So you know, that's the vast majority of our business and the vast majority of where our growth has been coming from. And you know, you can never make promises and guarantees about the future, but when you look at a business like Magic It's grown on average sixteen percent per year for the last ten years, and just clocked in over twenty percent in our first quarter, so we're starting off the year pretty good. Yeah.
Twenty six percent was the growth at Wizards, which, because I'm familiar with the business, I have been at your headquarters wizards headquarters in Seattle as well as your headquarters here on the East Coast, I understand how much that accounts for. I think more than half of quarterly revenue and growing at a strong clip. Have investors just misunderstood the story of Hasbro.
I'm not sure. I don't think you're just looking for us.
I'm looking at the nine percent or now seven and a half percent drop and wondering why the selloff. You know, we're worried about inflation, we're worried about the consumer, but it seems like those who are buying your IP continue to do so well.
I mean, I would look at a down day like today as a buying opportunity. Frankly, you know, I think we have a lot of strong structural advantages. You know, when you think about Hasbro, you need to think about it being a collector's gaming and IP company, and those are all growth businesses. You know, we frame our opportunity in terms of audience and category in an acronym called gem squared, and so those are categories that are gaming driven,
entertainment driven, multi purchase, and multi generational. In twenty twenty five categories that we define as gem squared, we're up twenty two percent versus the rest of the toy industry was down three percent. And of most of our capital, most of our brands, most of our growth is invested behind those gem squared insights and those gem squared brands. You saw it in Q one, where you know, we
grew thirteen percent. You see it in our guidance where we're projecting, you know, kind of a mid single digit growth rate for the company, and you see it in the bottom line where our profits have never been stronger, and our profit growth and our profit margins are some of the best in the industry.
Chris, I think, if I may, at least, it seems like the analyst communities reaction is kind of what you're talking about, this idea that your growth has been so strong thirteen percent in the first quarter. I mean, look at last year, the success and growth of Magic the gathering. Why is there like a slight step down to the single digits. What sort of changes as the year goes on that you don't get that like, you know low teens growth and success.
That you've seen. Well, I think we're a diversified business.
I think, you know, we always start the year with a tempered outlook.
About what we think the business can do.
And you know, we like to we like we like to under promise and over deliver, which is something that I think we've done now for nine maybe ten quarters and consistent, consistently. I think that's good for investors. I think that's good for our internal teams, and I think that's good for our fans.
We have, I guess a bit of a fanboy and our producer, Will Shaker in the control room, he's writing, tell me about the movies, guys. So you have a big theatrical slate coming right, Star Wars, another edition there, Toy Story. I think it's the fifth one, Spider Man Avengers. What do you expect from that in terms of toy sales?
Which are you know the obviously the resin the petroleum based products are getting hit with cost pressures, but I would imagine you'll have some pricing power as well here, Yeah, yeah.
And we do you know our we think one hundred dollars barrel oil has about a thirty million dollar cost head wind for us, But I think you have to look at that in the context of a business that generates one point four to one point four or five billion dollars in ebit up per year. So it's a relatively manageable set of cost pressures for us that we can offset inside of a large and diversified set of operations.
And I think you're right. Our entertainment slate is second to none.
We've got the Mandalorian and Grogu opening this weekend, the first big new Star Wars movie, I think in seven years, you know. So far, toy sales for that have been selling it at a robust clip in including one of the coolest toys we've ever made, the Ultimate Grogu, which is a five hundred and ninety nine dollars super high end animatronic collectible. Then we have a toy Story five, which is always great for our official company mascot mister Potato Head and his family.
Those sales always go through the roof on that.
Then we have Spider Man brand New Day, which first Spider Man movie in a couple of years, and you know, based on early previews that we've seen, it looks fantastic.
And then we're going to cap the year off.
With the Invengers Doomsday, which is like bringing back all the original cast and really propelling that story forward. So I think from an entertainment perspective, certainly in the short term we look fantastic, and I think the story only gets better in the midterm. You know, next year we have the Star Wars fiftieth anniversary, we have Star Wars Starfighter, we have more Marvel Superheroes films, and then Hasro's entertainment
slate is just starting to cook. You know, we're going to have you know, I think we have something like sixty projects in the hopper, and next year we'll have the debut of our new Magic animated series, which I think will help propel Hasbro's biggest and most profitable brand to all new levels.
You should have, by the way, some kind of golden ticket game where the winner gets to see your headquarters, the Wizards headquarters on the West Coast, and they get to own it.
And run it.
It's an amazing it's an amazing place. I was really excited to get to spend some time there. I want to just ask you finally about Monopoly because it's an age old property obviously, and you've done well online and digitally with Monopoly Go. But Will says there's potentially a live action feature film coming out. Can you tell us about that?
Oh?
Yeah, there's a live action feature film which we're partnering with Lionsgate and Margaret Robbie's Lucky Chat production that's been in development now for a year or so, so that should be pretty exciting. And certainly Margo is a fantastic talent, both creatively and as an actress. And then you know, Monopoly Go continues to cook with gas. You know, that's the biggest mobile game in history. It continues to deliver.
Like to put in context what Monopoly Go does for us, it's basically the equivalent of two blockbuster movies worth of licensing revenue per year to us. And that's an annuity that's not just a one and done. That's going to be an annuity that's going to stick with us for a very long time. And I think it just shows some of the innate advantages inside of Hasbro. We're very diversified.
We have toys, we have games, we have collectibles. We have a huge digital game business in licensing, a growing one in first party publishing, and then we have this great licensing business overall that you know, spans over one thousand partnerships, over five thousand collaborations, and you know, is like combined when you think about digital plus our physical licensing, it creates a merchandising of sixteen to eighteen billion dollars of Hasbro branded merchandise per year in addition to the
you know, the fourish billion dollars that Hasbro generates per year.
You know, I would say, like, I don't know if a Monopoly movie is for me, But what I said, a Dungeons and Dragons movie wasn't for me, and I loved it and it was great, So maybe that says something. Chris, always a pleasure to have you on. Hasboro's CEO. Chris Cox