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Easy-Bake ovens aren't selling, so Star Wars is Hasbro's only hope

by Peter A. McKay
Jul 24 2017, 5:08pm

What has America come to? It’s the middle of summer, people, and Super Soaker sales are sluggish.

So said Hasbro, maker of the mega water gun, in a quarterly report that sent its stock plunging Monday. Some of the disappointment was tied to a 14 percent drop in sales at its “emerging brands” unit, which the company said was “primarily driven by declines in Playskool, Super Soaker, and Easy-Bake oven products.” (The company’s “emerging brands” aren’t as well known as its “franchise brands,” which include things like Nerf, Monopoly, Play-Doh and My Little Pony.)

All fun and games aside, the report also tapped into deeper worries about all things related to the retail sector right now. Amazon is basically eating that world, complementing its digital dominance by building an unprecedented brick-and-mortar footprint through its pending Whole Foods acquisition.

And while the U.S. economy looks to be doing fairly well at the moment — we just had a good jobs report for June — shoppers continue to be pretty tight-fisted with their spending. And seeing as the U.S. economy is roughly 70 percent consumer spending, that is something to be worried about if you’re in the business of getting consumers to spend money on, say, hyper-aggressive water guns.

The U.S. isn’t the whole story though. In its earnings release, Hasbro also cited weakness in its British and Brazilian operations as factors weighing on its profits. But the company noted that demand for demand for Transformers, Monopoly, and Nerf toys is holding up pretty well.

Other key details surrounding the day’s move in Hasbro:

  • Hasbro shares fell more than 9 percent on the day, which saw the whole consumer-discretionary sector tumble. Rival Mattel fell almost 10 percent, while retail chains Macy’s and Target were off about 3 percent and 1 percent respectively.
  • The company is holding out hopes that the pending release of a new Star Wars sequel in December — and the toys that go with it — will give them a boost. Referring to “the timing of entertainment this year,” Hasbro chief financial officer Deborah M. Thomas said: “We believe the fourth quarter could represent a greater percentage of full year revenues than historical norms.”
  • Among its “partner brands” segment, which includes many entertainment-related products, Hasbro also mentioned Marvel properties as a potential boost to look forward to in the second half. But even Thor and the Hulk may have a hard time keeping up with Jedis.

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