Hasbro Inc. is shaking off its reputation as a boys’ toy company.
In a major coup, the company known for Transformers and G.I. Joe announced yesterday that it secured the doll license starting in 2016 for two juggernauts of the girls toy aisle with Walt Disney Co.’s “Frozen” and Princess brands. Even better for Hasbro is that it’s taking the rights to make Elsa and Cinderella figurines from larger rival, Mattel Inc.
“We’re talking about hundreds of millions of dollars of revenue in Disney Princess going away starting in 2016,” said Sean McGowan, an analyst at Needham & Co. in New York.
Hasbro had been ceding the doll category to Mattel, which dominated with its own brands like Barbie and American Girl as well as the relationship with Disney. Instead, Hasbro built a girls business by reviving brands it owned, such as My Little Pony. That helped it triple sales from girls toys to more than $1 billion in a decade. With this deal, it has set its sights squarely on Ken’s girlfriend.
“We have a true understanding of girls globally and how today’s girls want to play,” Hasbro Chief Executive Officer Brian Goldner said in yesterday’s statement. “The entire Hasbro team is looking forward to providing consumers with inventive new play experiences based on the beloved Disney Princess and ‘Frozen’ characters and stories.”
Hasbro Gains
Shares of Hasbro dropped 0.3 percent to $54.77 at 9:48 a.m. in New York, following an advance of 3.8 percent yesterday, the biggest gain since February. The Pawtucket, Rhode Island-based company is little changed for the year. Meanwhile, Mattel fell 0.9 percent to $31.38, adding to a decline of 1.3 percent yesterday.
Hasbro and Disney declined to comment on the length or the finances of the deal.
For Mattel, “there’s no question they are popular brands, but our portfolio is still quite strong” with Barbie, Monster High and Ever After High, said Alex Clark, a spokesman for El Segundo, California-based Mattel. The company will also have “Frozen” for the next two holiday shopping seasons, which will likely be the height of its popularity, he said.
While Mattel doesn’t break out sales from the Disney doll license, McGowan said it may have generated $500 million in revenue last year and that’s likely to increase this year with the continued success of “Frozen.” The Oscar-winning Disney film about two royal sisters in an icy kingdom was released last Thanksgiving and became the fifth-highest grossing film of all time with more than $1 billion in global ticket sales.
Portfolio Star
That on-screen success has been a boon to Mattel, especially since top doll brands Barbie and Monster High haven’t been growing. Mattel CEO Bryan Stockton called “Frozen” the “star of the portfolio” on a conference call in July to discuss second-quarter results.
“Mattel’s revenue and earnings visibility got a little worse,” said McGowan, who recommends holding shares of Mattel and Hasbro. “It’s a meaningful, but not crippling negative for Mattel.”
The Disney Princess brand has been a phenomenon in its own right. Disney has perfected the cycle of releasing movies with female characters and then later initiating them into the princess sisterhood in real-life ceremonies that boosts merchandise sales.
Disney, based in Burbank, California, has driven the princess-fad over the past few years -- one in which little girls could be seen wearing princess dresses several days a week and partaking in all manner of princess activities, accessories and toys.
‘Toy Wars’
“Disney Princess is a great brand” and it’s only a matter of time before Elsa and Anna, the stars of “Frozen,” get added to the lineup, said Jim Silver, editor in chief of TTPM.com, a toy website. “It makes the toy wars a lot more interesting.”
Hasbro won over Disney with what it has recently done in girls toys, especially Nerf Rebelle, and how it handled Disney properties Star Wars and Marvel, Chief Marketing Officer John Frascotti said in an interview. Rebelle is a toy bow-and-arrow line aimed at girls and was an offshoot of deep research Hasbro did into what makes today’s girls and moms tick, he said.
Girls and moms “don’t feel that traditional boundaries of what has been purely girl play or purely boy play should apply,” Frascotti said. “We really felt there was an opportunity to bring some of our fresh thinking to these great brand franchises in Disney Princess and Frozen.”
Bloomberg
Sat Sep 27 2014
Boys' toys company Hasbro looks ready to eat into a bigger piece of the girls' pie.
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