Hasbro Inc. (NASDAQ:HAS) Q2 2019 Earnings Conference Call - Final Transcript

Jul 23, 2019 • 08:00 am ET


Hasbro Inc. (NASDAQ:HAS) Q2 2019 Earnings Conference Call - Final Transcript


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Brian D. Goldner

fourth quarter.

Importantly, Magic second quarter performance was driven by growing engagement and monetization of tabletop and arena and through special releases, like Modern Horizons that are launched once per year, this year in the second quarter. The team also delivered initial shipments of the Core Set 2020, which launched on July 12 in store and on Arena, further contributing to the above planned second quarter.

We're also investing to ensure the long-term success of Magic: The Gathering and Arena with higher year-over-year spend to drive awareness and engagement and in support of an expanded events schedule. The team hosted a successful Mythic championship played on Arena in June, featuring 68 of the top Magic players who competed for a share of the $750,000 prize pool.

Later this year, we are running several additional Mythic championships for Arena and tabletop. We are also increasing our development investment in future digital games and expertise across multiple properties that will come to market over the next several years. This includes new games for Magic and for Dungeons & Dragons, which also grew revenues this quarter.

At retail, second quarter consumer takeaway was up mid-single digits, excluding Toys "R" Us. This in part reflected the shift of Easter into the second quarter, but we're also seeing overall positive point of sale trends. In the US, point of sale was up double-digits in the second quarter and up slightly through the first half. Global point of sale for the first half of the year declined mid single-digits, primarily due to Europe. In Europe, POS has picked up in recent weeks, fueled by continued improvement in the underlying business, new initiatives, such as Nerf Fortnite and growth in MARVEL and MONOPOLY.

The US team navigated a dynamic trade and inventory environment during the quarter. While no new material tariffs have been enacted on our products. We did incur incremental expenses to prepare for the potentiality of tariffs in the US. The team did an exhaustive amount of work and is extremely well prepared for what would be a very challenging and damaging impact if tariffs were implemented. Deb will speak in more detail about the implications.

Importantly, following a challenging 2018 we are recapturing share across a broad range of retailers. E-commerce has accelerated substantially with both omnichannel and pure play retailers driving revenue and point of sale growth significantly above the rest of the business. Last week, Hasbro brands delivered strong growth during Amazon's Prime Day event. In Amazon markets around the world games Play-Doh and Nerf were among the standout drivers. We're leveraging online and digital to engage directly with consumers, launching two new HasLab projects this month through Hasbro Pulse and delivering innovative new shopping and social media experiences across geographies.

This past weekend at San Diego ComicCon we had a major show presence that we also shared with fans through social media live from the show floor with interviews, behind the scenes information, news around upcoming product and pre-order launches. Fans