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Hasbro (HAS+0.59%) is betting big on “kidults” – adults and teens who continue to buy toys and collectibles like G.I. Joe action figures and Marvel (DIS+1.84%) legends.
The shift is central to the toymaker’s strategy to revive its post-pandemic sales slump. Currently, around 60% of Hasbro’s revenue comes from customers aged 13 and older.
Gina Goetter, the company’s finance chief, explained during the company’s Feb. 20 earnings call that Hasbro is investing in categories with strong appeal to this demographic. “We believe that demographic has more spending and sticking power,” she said.
The Pawtucket, Rhode Island-based company has already implemented a series of cost-cutting measures, including $600 million in savings and the reduction of over two-thirds of its product lineup.
Hasbro’s toy business, traditionally a stable pillar of the company, has faced challenges in recent years. Demand for toys has been down since the pandemic, with consumers tightening their belts amid inflation. In the latest quarter, Hasbro’s revenue dropped 15% year-over-year, falling to $1.1 billion.
To make matters more complicated, looming tariffs from President Donald Trump could further pressure Hasbro. China is a key player in the company’s operations, currently manufacturing 50% of Hasbro’s U.S. toys and games.
“We’re working to reduce that reliance to below 40% over the next two years,” Goetter said. But shifting manufacturing to countries like Vietnam, India, and Indonesia could take years to fully implement.
The tariff costs are likely to be absorbed within the supply chain, Goetter noted, which could affect suppliers, manufacturers, and even consumers as expenses trickle down through production and distribution.
Despite the near-term headwinds, Hasbro remains optimistic. The company is diversifying its revenue streams, with licensing becoming a major profit driver.
“Licensing is up big time,” Christian P. Cocks, Hasbro’s CEO, said during the earnings call. “It’s relatively insulated from some of the tariff drama that’s going on right now.”
Meanwhile, the games division – home to staples like Dungeons & Dragons – continues to perform well, benefitting from long-term trends in gaming and its dedicated fanbase.