By Neil J Kanatt
July 21 (Reuters) – Hasbro raised its annual revenue and profit forecasts on Tuesday, betting on resilient demand for its digital gaming business and continued strength in “Magic: The Gathering,” sending the company’s shares up about 11% in early trading.
The company also beat second-quarter sales and profit estimates and said the flagship “Magic” franchise fueled a 27% rise in revenue at its Wizards of the Coast and Digital Gaming unit, compared with 16% growth a year earlier.
Stronger spending by higher-income consumers helped Hasbro offset weak demand from lower-income households facing persistent inflation.
“Magic player base is growing, new players are growing, we’re reacquiring lapsed players.” CEO Chris Cocks said.
Hasbro launched the “Secrets of Strixhaven” series in April and its “Marvel Super Heroes” title last month, and expects to release its Star Trek-themed set in November.
“The second half of the year is a little bit of a wild card,” James Zahn, editor-in-chief of Toy Book magazine, said, adding that Magic’s release schedule is heavier than last year’s.
The Play-Doh maker now expects annual revenue to grow in the range of 5% to 7%, compared with its prior forecast of 3% to 5%. Analysts expected growth of 6.3%, according to data compiled by LSEG.
Some analysts, however, called the forecast conservative.
Hasbro’s finance chief Gina Goetter said the forecast primarily accounts for the strong growth in the first half of the year, and that uncertainty around the crucial holiday season exists.
“A lot can change between September and December. So it (forecast) just allows us a little bit of protection.”
It sees annual adjusted core profit between $1.45 billion and $1.50 billion, compared with the previous outlook range of $1.40 billion to $1.45 billion.
Second-quarter revenue rose 16% to $1.14 billion, topping analysts’ estimates of $1.07 billion.
The company’s quarterly adjusted profit fell 1.5% to $1.28 per share. Analysts had estimated a profit of $1.14 per share.
Hasbro said it incurred $11 million in incremental expenses in the quarter from a cybersecurity incident that occurred in March, and expects additional related costs in the future.
(Reporting by Neil J Kanatt in Bengaluru; Editing by Leroy Leo)
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