Hasbro Earnings: Profit Metrics Soar Thanks to Solid Games Business and Lower Markdowns

Although narrow-moat Hasbro's sales performance continues to flounder, we contend that the real story behind the firm's third quarter is in its profit metrics. Sales fell 15%, to $1.3 billion, with consumer products contracting 10% and Wizards of the Coast and digital, or WOTC, down 5%. However, Hasbro's CP segment sales were primarily affected by exited brands and lower closeouts, which resulted in a strong segment-adjusted operating margin of 15%, up nearly 400 basis points. This supported an enterprise level operating margin of 25.7%, a third-quarter high-water mark, despite some compression in the WOTC profit profile.