00:00What happened? Magic. The gathering suddenly got extraordinarily popular. A 23% increase in card sales. Exactly. No. So Magic, The gathering is on fire. For lack of a better term, They’re seeing people engage with the game in actual card shops in person, up over 43% year over year. So it’s a really popular category, a really popular set itself. And they also had Final Fantasy, which was one of their strategies is to kind of take IP from other companies and merge that with magic, the gathering and all of it’s just going full steam ahead. What is it with this revival in sort of physical games, ride board games and card games? And I’m seeing coffee shops pop up all over the place where you go and you have your coffee or whatever else your beer and and you play a board game. Is that behind this trend? I think it is. And a lot of it really is. What we saw during the Covid was obviously people took to online for a lot of these games. So, you know we saw either new players exit or people just stopped playing when they stopped being able to do it in a physical space. What we’re seeing now is it’s beyond the revenge going into the stores. Right. What we’re seeing now is people are integrating it more and more into their lives and it’s really becoming more of a lifestyle. One thing that Hasbro also told us today was that the average tenure of their player is five years. So people are doing this for quite a long time. That is a long time. The other good thing from Magic The Gathering is that the products manufactured primarily in the US, Europe and Japan. So it’s a little insulated from some of the tariffs, although some has was other products are not as well insulated. Do they have a plan? No, that’s a good question. That’s one of the things that I think one of the reasons why the stock is trading down today. So what they were effectively able to do was guide down their consumer products, which is all that traditional toys. Right. 50% of that comes from China. And they were able to guide that down. And now they expect flat margins to down 200 basis points based on the tariffs. Now, I think some people were a little bit disappointed just because when we spoke to Hasbro last quarter in Q1, the up the China tariff rate excuse me was 145% versus the 30% that we’re experiencing today. So people might not have expected that to be as low as they guided today. Pretty ambitious in terms of shareholder return and so on, though, Right. It’s promised now to expand its margins by another 50 to 100 basis points. Is that doable as well as continuing to increase its dividend, as you said, pay down debt? Yeah, well, I think that’s kind of the incredible thing, is that you’re actually going to see flat toy margins or down 200 basis points. But this magic, the gathering is on fire. And not only is it magic, the gathering, they also have a digital games business which is performing really well. So Monopoly Go, which is like a web mobile app, actually also posted a record quarter as well. So that entire segment is working really well for them. Retail networks have been a little bit over inventory. Is there a problem going forward there that investors should be concerned about based on our channel checks and just overall data? No, nothing to be worried about. But obviously investors or excuse me, retailers were more cautious heading into the holiday. And as we were kind of trying to navigate the large tariff jumps. So it’s I would call it more cautious then, you know, there was a true problem. You did mention digital games there. Is Hasbro missing out on an opportunity. Does it need to do more in the digital space, particularly, say, the very young kids that are migrating to digital earlier and earlier these days? Exactly. Could pivot that way. Right now, they really don’t have an offering for that. But what they have found is kind of their core sweet spot and what they are doing is expanding their digital that way. So next year they’re going to release their first triple A video game and that’s going to be within the the world that they’ve created within Dungeons and Dragons and Magic, the Gathering. And that’s actually going to be released next year. And they’ll be the first one that they’ve done in-house.Stream Schedule:US BTV+
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