Toy makers Mattel and Hasbro this week both showed signs of a comeback as they work to recover from the loss of their biggest retail partner. But both are also diversifying their businesses to include entertainment that goes well beyond toys.
It's as though, after the demise of Toys R Us, both companies are saying, "Toys aren't really us, as much, either."
Neither company is exactly getting out of the toy business, but sales in the category are falling. Mattel's first quarter net sales fell 3% year over year to $689.2 million, according to a company press release. Its Barbie gross sales rose 7% (13% in constant currency), dolls gross sales fell 2% (up 3% constant currency), Hot Wheels gross sales rose 4% (9% in constant currency), Fisher-Price and Thomas & Friends gross sales fell 8% (5% constant currency), infant / toddler / preschool sales fell 15% (11% constant currency) and action figures / building sets / games gross sales rose 18% (22% constant currency).
At Hasbro, first quarter revenues rose 2% to $732.5 million (6% in constant currency), with franchise brands revenue (including Play-Doh, Transformers, and Monopoly) rising 9%, emerging brands up 22% and partner brands down 14%, according to a company press release.
But both companies are shifting some emphasis to entertainment. Mattel's film division "continues to build momentum," CEO Ynon Kreiz told analysts on a Thursday conference call, according to a Seeking Alpha transcript. In the quarter, Mattel announced its first ever live-action feature films for American Girl and View-Master, each in partnership with MGM. To date, the company has announced five films, "with more to come," he said.
In February, Mattel Television also announced a slate of 22 shows including animated and live-action television programs based on its toys. Mattel in January launched a mobile version of its Uno game on iOS and Android, he also noted.
Meanwhile, Hasbro is escalating in gaming, with advancements in both digital gaming and analog tabletop, Hasbro CEO Brian Goldner told analysts Tuesday, according to a Seeking Alpha Transcript. The company's Allspark unit also produces the Power Rangers television shows and My Little Pony films.
"Overall, we're in the home entertainment window," he said. "Home entertainment is performing at a higher level than our original estimates. So that's quite good."
The companies' toy sales continue to be challenged by Toys R Us' downfall, both chief executives said, and both said the timing of Easter hurt in the quarter as well. Mattel's net quarterly loss narrowed to $183.7 million from $311.3 a year ago, while Hasbro's net earnings in its quarter shifted into the black, rising to $26.7 million year over year from a $112.5 million loss a year ago.
