Former Chairman & Chief Executive Officer, Hasbro
Hasbro CEO: Brand Growth | Mad Money | CNBC
From movies to video games, Hasbro is a one-stop shop for entertainment. With shares moving higher after earnings, Jim Cramer spoke to the CEO to see if it's still 'game on' for the company.
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About Brian Goldner
In July 2020, Goldner stated that Hasbro's supply chain had improved after being closed from mid-March to mid-May, with manufacturing sites in Massachusetts, Ireland, and India reopening. He reported that consumer demand was strong, with point-of-sale sales up 18% in the United States and globally up high single digits, but noted that weak supply and retail inventories had declined by nearly 20%. Goldner said Hasbro had diversified its supply chain to about 55% in China, aiming for 50% by year-end, and discussed the company's ability to flex toward e-commerce if brick-and-mortar retail faced continued challenges. In May 2020, Goldner described the first quarter as "solid" and noted a "giant step up" in e-commerce and omnichannel sales. He said the second quarter would be challenging due to store closures and manufacturing disruptions, but the company expected to be ready for the holiday season. Goldner highlighted a 40% jump in gaming sales and said Hasbro was producing 50,000 face shields per week for health workers in Massachusetts and Rhode Island. In February 2019, Goldner characterized 2018 as a "disruption and an interruption" to a growth trajectory, projecting mid-single-digit revenue growth and a return to operating profit margins above 15% by 2020, driven by brands such as Power Rangers, Transformers, Nerf, and gaming properties like Magic: The Gathering.
Transcript (15 segments)
✨ AI-enhanced transcript with speaker attribution
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Jim Cramer0:00
I always tell you you can't make snap judgments about a company's earnings. You need to listen to the darn conference call before you can come to a recent decision. Just look at what happened to the stock of Hasbro today, where I'm gonna use this as the example from now on. From Mad Money, the big toy maker makes all sorts of iconic brands from Nerf to My Little Pony, tons of licensed products from Disney properties, think Star Wars, Marvel, and all the classic Disney properties. Thanks to these licensing deals, Hasbro was a beloved stock for years. But then the bricks and mortar, largely Toys R Us, filed for a surprise bankruptcy protection, caused investors to worry about what the big toy retailer's woes might mean for Hasbro. Well, this morning Hasbro reported latest results, and while the company delivered a major earnings beat, it also gave you a sizable revenue shortfall. The market couldn't really decide what to make of it. So the stock sold off hard in early trading, but by 10:00 a.m., Hasbro's conference call wrapped up and the stock took off, closing up eight dollars and 29 cents, remembering a bad day. The reason: management talked about better margins, strengthening the core brands, and most important, they sounded confident that they could weather the Toys R Us bankruptcy with aplomb. Going for him, so let's dig deeper with Brian Goldner, the Chairman and CEO of Hasbro, learn more about the quarter and his company's prospects. Mr. Goldner, welcome back to Mad Money.
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Brian Goldner1:19
Hi Jim, how you doing? I'm surprised you got a skit. I know that your conference calls are always chock-full of things I didn't know. Were you surprised that the stock got crushed at the beginning and how far it came back after you told the story?
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Jim Cramer1:28
You know, we really focused on telling our story as a company. We had great results for the year, very strong franchise brand growth, great gaming growth, and our emerging brands grew as well. The only thing that went backward were partner brands, and we wanted to explain that our entertainment and licensing business was really accelerating, that you were seeing the success all around our brand blueprint for brands like Transformers and My Little Pony, and that's what we focused on today.
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Brian Goldner2:04
Okay, which reminds me of a line that you had in the conference call. I thought you buried the lede, Brian. You said this is an unprecedented era of content. I've never heard that concept. You're absolutely right, and Hasbro's in every aspect of it. Isn't that our goal? Our goal is to make sure that we can bring to life our brands for our consumers and audiences around the world. We've seen the world's best storytellers do this, and we needed to do this. We want to own more of the franchise economics of our brands. We own all the rights. You're seeing Transformers activated in mobile gaming, you're seeing it on a PC online game with Tencent in China, you're seeing My Little Pony in that animated film we made for a nominal amount of money, really bring to life our consumer products business and allows us to go around the world with one voice to retailers, offering everything from apparel to toys and games. And that's really activating our brand and delivering value for shareholders.
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Jim Cramer2:58
And what you've done is make it so that rather than have a one quarter story around the holiday season, you've got a secular growth story that is worldwide, that is every single quarter on its own.
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Brian Goldner3:11
Well, we also have great partners, licensors who have great properties and amazing stories that they're telling around their brands. This year we have a great lineup. Just what you're talking about with Marvel, it starts with Black Panther in a week and our product is out on shelf. We're so excited about that movie. We have an Avengers movie coming, we have another Spider-Man movie coming, an Ant-Man movie coming for the year, and then of course our own Transformers movie coming, Bumblebee, at holiday this year. So it's a really strong lineup for entertainment. And then of course we supplement that with all kinds of television, our games business, mobile gaming, and again activating that around the blueprint and around the world.
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Jim Cramer3:51
And you also did assuage some worries. You said November, December there were some issues around Star Wars, but early 2018 you said it's a significant improvement. The story changed the course of the stock. But you must feel pretty confident too. You said significantly improve, those are chosen words and you picked them.
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Brian Goldner4:10
That's exactly right. Well, you know, we really have seen the performance of the Last Jedi product accelerate once people saw the movie. We just thought that the window between the merchandise date and the movie date was a bit too long. We've already taken that into consideration in partnership with Disney. You'll see that for the next movie coming, which is Solo, the Han Solo movie, which is coming in May, we'll merchandise that in April. So we'll shorten that window, which enables us to take advantage of both paid and earned media and all the excitement around that movie coming to theaters. We have a great lineup of merchandise. You can imagine that between Last Jedi and its home entertainment window and the Solo movie, we have great product at all kinds of different price points for fans and families.
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Jim Cramer4:52
Well, problem. What I'm hearing is the tale of entertainment, and yet when I talk about your stock to people who are fund managers and reporters, they say it's a tale of M&A. That you've got to say, Brian, you're doing the Mattel thing, right? Isn't that what people care about? When I'm listening to you, I think Mattel, though that may have happened, you may have discussed something, but there's nothing going on. You know, I couldn't comment about that. What I will tell you is we first and foremost are investing in our business. We built these capabilities of the brand blueprint over a 10-year period. You know, you're seeing our performance come to the fore. We always are looking at how we return excess cash to shareholders. Our board just approved a raise of the dividend to 11%. That's really been our focus, and I couldn't comment on any M&A speculation.
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Brian Goldner5:36
Fair enough. Now I always am surprised by different brands that take off. One will be played out, it'll be Nerf, Transformers went over the strength, Monopoly. I know Monopoly from strength to strength. It's because the team keeps reinventing Monopoly year in, year out. In fact, I'm very excited, Jim, you'll love our new version of Monopoly. It's for people who cheat. So it's a Monopoly Cheaters Edition coming this year. It comes complete with handcuffs for those who may cheat and get caught. You just don't want to get caught. But we think in this environment it's very topical, and people are already buzzing about it.
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Jim Cramer6:09
Well, I've seen things like online gaming companies that are developing like Activision Blizzard doing the kind of thing we're seeing with Overwatch. I'm seeing this new HQ, this game video game shows. Can Hasbro do a video game Monopoly show that we'll all want to play or cheat with?
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Brian Goldner6:30
That's a great idea. I'll tell you, we are launching our Magic: The Gathering Arena product. We've been in closed beta, it's been very successful, so we'll launch that this year. We're launching a raft of digital games around Magic. Magic is also an eSports brand where you're seeing people play and we're watching on Twitch. Dungeons & Dragons had its best year since we acquired the brand in 1997. So we're really seeing the acceleration of those kinds of immersive games brands, and we believe there's a lot of future in the digital gaming space and the eSports space for those brands.
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Jim Cramer7:00
Well, I've loved the way you've reinvented the company. I remember there was a time where I said, okay, well it's February, that story's done, I'll see in September. That is obviously not the Brian Goldner Hasbro. Brian, thank you so much. Great to see you, sir.
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Brian Goldner7:14
Jim, thanks. See you.
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Jim Cramer7:18
Okay, this stock went up because the business is good. That's why I was probably going to Chairman CEO of Hasbro. You know what, the market's been crazy. Why don't you retreat to this one next time we have a big sell-off? That makes sense to me. Mad Money's back after the break. Oh yeah. Jim Cramer here. Thanks for watching. You see me, see you on YouTube. Click here to subscribe and get the jump on my exclusives with CEOs, plus market news, investing advice, and a whole lot more.