Skip to Content
MarketWatch

Hasbro says preorders of its new Wordle game are 'off to a record start'

By Tonya Garcia

Hasbro reported second-quarter revenue that missed expectations, but adjusted earnings beat targets

Wordle, the popular digital game that challenges players to guess a five-letter word each day, is going to be a board game created by Wordle parent New York Times Co. (NYT) and toy giant Hasbro Inc. and Hasbro says presales are off to a record start.

Wordle: The Party Game is scheduled for release in October. Many players currently tweet their success or crushing failure at figuring out the word-of-the-day. Soon players will be able to take their skills offline and compete with friends the old-fashioned way.

Hasbro (HAS) reported its second-quarter earnings before the opening bell on Tuesday, with revenue falling just short of the FactSet consensus. Adjusted earnings per share beat expectations.

Hasbro's Chief Executive Chris Cocks said the reception for the Wordle board game has been enthusiastic.

"Our newest game announcement, Wordle: The Party Game, is off to a record start for gaming preorders," he said, according to FactSet.

That, along with results from the recent Amazon Prime Day shopping event should help the company's inventory levels.

See: Macy's will bring Toys 'R' Us to every one of its U.S. stores for the holidays

"While our inventory levels are up year-over-year at the end of Q2, the inventory is of high quality, positioning us to meet consumer demand and promote our new product innovation aggressively," Cocks said.

"[W]e expect inventory by year-end to be approximately flat year-over-year and to see reductions in on-hand supply by the end of Q3."

Many retailers and consumer companies have been grappling with inventory challenges. There have been shortages and delays due to supply-chain disruptions. Now, as supply-chain networks untangle, many companies have too much merchandise on hand.

Also: Target's steps to reduce inventory glut are correct but are a few weeks late, analyst says

"We're much better-positioned to meet demand this year versus last," said Deborah Thomas, Hasbro's chief financial officer, on the earnings call, according to FactSet. The company says it has taken steps to make sure it has the product to meet demand heading into the important holiday season.

"This action resulted in higher than typical inventory levels at Hasbro for this time of year. To avoid out-of-stock positions of the last year holiday season die to supply-chain disruptions, retailers also shifted some consumer product direct shipments into the second quarter from the third quarter."

Besides Wordle, other areas of strength include Magic: The Gathering, which led a 15% rise in tabletop revenue, and a 3% increase in revenue for the Wizards of the Coast and Digital Gaming segment.

Still, other areas of the business experienced declines, including the Film & TV segment, which was hurt by the timing of the delivery of the first season of the show "Cruel Summer," the company said.

"Per our checks + industry data, we believe Mattel had the better quarter at retail, and this update doesn't alter our view," wrote Stifel in a note.

Toy rival Mattel Inc. (MAT) is scheduled to report second-quarter earnings on Thursday.

Stifel rates Hasbro stock buy with a $103 price target.

"We are a little worried about inventory levels but still see Hasbro as the leader in the space with a strong strategic plan," wrote CFRA in a note.

CFRA rates Hasbro shares buy with a $95 price target, down from $100.

Hasbro stock is down 21.4% for the year to date while the benchmark S&P 500 index is down 17.4% for the period.

-Tonya Garcia

 

(END) Dow Jones Newswires

07-20-22 0707ET

Copyright (c) 2022 Dow Jones & Company, Inc.