What happened
Week to date, shares of Hasbro (HAS 1.82%) were down by 4.8% as of 12:01 p.m. ET on Friday, according to data provided by S&P Global Market Intelligence.
The company, which is in the midst of a strategic review process, announced Thursday that it was looking to sell part of its eOne TV and film business. The stock has fallen 40% year to date due to the company's slowing revenue growth amid higher inflation. Could this sale be the beginning of a turnaround for the toy maker?
NASDAQ: HAS
Key Data Points
So what
Hasbro has struggled to keep its sales up in 2022 as consumers struggle with high inflation. Through the first three quarters of the year, its revenue was down 3% on a constant-currency basis. But at its investor day in October, the company laid out a plan to improve performance by focusing on those of its brands with the biggest growth and profit potential.
Hasbro has already sold several non-core businesses from the eOne portfolio over the last 18 months. It originally acquired eOne for $3.8 billion in 2019, and the recent sales shouldn't be viewed as the company retreating from its plans for the property. Instead, management will retain the capabilities eOne offers to develop and produce animation, digital shorts, scripted TV, and theatrical films based on Hasbro's core brands.
Now what
The assets for sale should fetch a hefty price tag. The catalog will include over 6,500 pieces of content, including The Woman King, Yellowjackets, and The Rookie franchise. Management is looking to maximize the value of these assets, which will help accelerate its growth strategy.
The sale, along with management's plan to save up to $300 million in annual costs by 2025, will also help shore up Hasbro's balance sheet. The company is currently saddled with over $3 billion of net debt.
These moves could be the catalysts that get the stock moving higher over the next few years, but Hasbro will also need to stabilize its revenue growth if it's going to fully restore investor confidence.
