HAS Q2 Deep Dive: MAGIC Drives Growth Amid Tariffs and Consumer Product Shifts
Is now the time to buy HAS? Find out in our full research report (it's free).
Hasbro (HAS) Q2 CY2025 Highlights:
Revenue: $980.8 million vs analyst estimates of $882.1 million (1.5% year-on-year decline, 11.2% beat)
Adjusted EPS: $1.30 vs analyst estimates of $0.77 (68.6% beat)
Adjusted EBITDA: $302 million vs analyst estimates of $227.6 million (30.8% margin, 32.7% beat)
EBITDA guidance for the full year is $1.19 billion at the midpoint, above analyst estimates of $1.12 billion
Operating Margin: -81.4%, down from 21.3% in the same quarter last year
Market Capitalization: $10.77 billion
StockStory's Take
Hasbro's second quarter results reflected meaningful momentum in its Wizards of the Coast business, particularly with the MAGIC: THE GATHERING franchise, which offset softer performance in the consumer products division. While overall sales declined modestly, management cited MAGIC's 23% year-over-year growth and the robust performance of the Final Fantasy set as key drivers. CEO Chris Cocks highlighted, 'Final Fantasy took one day to deliver what Lord of the Rings did in six months,' underscoring the magnitude of demand. Management acknowledged that U.S. consumer product sales were impacted by shifts in retailer ordering patterns and macroeconomic uncertainty, as well as timing issues tied to tariffs.
Looking ahead, Hasbro's updated guidance is underpinned by ongoing strength in MAGIC: THE GATHERING, further product releases in the Universes Beyond portfolio, and cost management initiatives to mitigate tariff headwinds. CFO Gina Goetter cautioned that the impact of tariffs would be more pronounced in the second half, stating, 'We haven't seen any of that tariff impact in the P&L quite yet ... that starts to manifest in the back half of the year.' Management also pointed to upcoming launches such as Spider-Man and Avatar: The Last Airbender sets, as well as ongoing diversification of the supply chain, as central to sustaining growth and protecting margins.
Key Insights from Management's Remarks
Management attributed the quarter's outperformance to continued MAGIC: THE GATHERING expansion and effective cost control amid shifting retailer behavior and trade policy uncertainty.
MAGIC: THE GATHERING momentum: The franchise delivered its strongest quarter ever, driven by the success of the Final Fantasy Universes Beyond set, which became the highest-grossing MAGIC release to date. Management noted that community engagement set new records, with MagicCon Las Vegas drawing over 19,000 attendees and organized play up 40% year-over-year.
Retailer inventory timing: U.S. consumer product sales declined as retailers delayed holiday inventory purchases and shifted from direct imports to domestic fulfillment, largely due to tariff-related uncertainty. Management expects much of this delayed ordering to recover in the third and fourth quarters as holiday demand builds.
Tariff mitigation efforts: Leadership detailed a playbook for managing higher input costs, including cost reductions, supplier diversification, and selective price increases. About 50% of U.S. toy and game volume currently originates from China, but Hasbro aims to reduce this to less than 40% by 2027.
Digital and licensing growth: Hasbro's licensing and digital gaming segments continued to outperform, with MONOPOLY GO! hitting new user and revenue milestones. The company also announced a new casino gaming licensing partnership to further diversify high-margin revenue streams.
Operational transformation progress: Management highlighted $98 million in gross savings year-to-date from transformation initiatives across supply chain, SG&A, and product development, aiming to reach $175–$225 million in savings for the year. These efforts helped maintain profitability despite headwinds in consumer products.
Drivers of Future Performance
Hasbro's forward outlook hinges on MAGIC: THE GATHERING expansion, cost control measures, and the ability to navigate tariff-related risks in consumer products.
MAGIC product pipeline: Management expects continued growth from upcoming Universes Beyond releases like Spider-Man and Avatar: The Last Airbender, as well as further engagement and backlist sales. CEO Chris Cocks emphasized that upcoming collaborations and new player demographics could drive additional expansion in 2026 and beyond.
Tariff and supply chain strategies: The company is accelerating supplier diversification and onshoring initiatives to reduce reliance on China and limit tariff exposure. CFO Gina Goetter noted that while current tariff expenses are manageable, rates remain fluid and may impact both costs and pricing strategies through next year.
Consumer product recovery: Management anticipates a rebound in consumer product sales in the second half as retailers resume inventory purchases for the holiday season. However, they remain cautious given ongoing retailer conservatism and the potential for further shifts in order patterns.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the pace of MAGIC: THE GATHERING product launches and new player acquisition, (2) progress in reducing supply chain reliance on China and mitigating tariff costs, and (3) signs of recovery in consumer product sales as retailers rebuild inventory for the holiday season. Developments in digital gaming partnerships and the rollout of new Universes Beyond sets will also be key areas of focus.
Hasbro currently trades at $76.55, down from $77.61 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it's free).
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