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Financial report summary
?Risks
- Our business will suffer if we are not successful in executing our strategy and transformation initiatives.
- Consumer interests change rapidly and acceptance of products and entertainment offerings are influenced by outside factors, making it difficult to design and develop innovative products, play patterns and entertainment offerings which are and will continue to be popular with children, families and audiences.
- Our business will suffer if we are unable to innovate, develop and invest in digital gaming.
- If we fail to respond to or capitalize on the rapid technological development in the entertainment industry, including changes in entertainment delivery formats, our business could be harmed.
- The industries in which we compete are highly competitive. If we are unable to compete effectively with existing or new competitors, our revenues, market share and profitability could decline.
- We may not realize the full benefit of our licenses if the licensed material has less market appeal than expected, if revenue from the licensed products is not sufficient to earn out the minimum guaranteed royalties or if licenses are not renewed.
- We may not realize the anticipated benefits of acquisitions, dispositions or investments in joint ventures, or those benefits may be delayed or reduced in their realization.
- If we are not successful in transforming our supply chain operations, our business may be harmed.
- An inability to develop, introduce and ship planned products, product lines and new brands in a timely and cost-effective manner could result in excess inventory, a shortage of products or otherwise damage our business.
- If we are unable to navigate through global supply chain challenges, our business may be harmed.
- If we are unable to adapt our business to the continued shift to direct-to-consumer, our business may be harmed.
- The concentration of our customer base means that economic difficulties or changes in the purchasing or promotional policies or patterns of our major customers could have a significant impact on us.
- Our substantial business, sales and manufacturing operations outside the U.S. subject us to risks associated with international operations.
- Our reliance on third-party manufacturers to produce our products, particularly in China, the U.S., Vietnam and India, presents risks to our business.
- Our dependence on third-party relationships with studios, content producers and distribution channels to develop and distribute digital games and entertainment content is critical to our business.
- Our success is dependent on the efforts and dedication of our officers and other employees.
- If we fail to develop diverse top talent, we may be unable to compete and our business may be harmed.
- Our business may be harmed if we are unable to protect our critical intellectual property rights.
- Failure to successfully operate our information systems and implement new technology effectively could disrupt our business or reduce our sales or profitability.
- If our electronic data is compromised our business could be significantly harmed.
- Outbreaks of communicable infections, diseases, or public health pandemics in the markets in which we and our employees, consumers, customers, partners, licensees, suppliers and manufacturers operate, could substantially harm our business.
- Inflation and other adverse economic conditions in the markets in which we and our employees, consumers, customers, suppliers and manufacturers operate could negatively impact our ability to produce and ship our products, and lower our revenues, margins and profitability.
- Changes in U.S., global or regional economic conditions could impact discretionary consumer spending and harm our business and financial performance.
- Our quarterly and annual operating results may fluctuate due to seasonality in our business.
- We have had and may in the future have significant impairment charges that adversely affect our net earnings.
- Changes in foreign currency exchange rates can significantly impact our reported financial performance.
- If we were unable to obtain or service our other external financings, or if the restrictions imposed by such financing were too burdensome, our business would be harmed.
- Changes in, or differing interpretations of, income tax laws and rules, and changes in our geographic operating results, may impact our effective tax rate.
- We are subject to various government regulations, violation of which could subject us to sanctions or otherwise harm our business. In addition, we could be the subject of future product liability suits or product recalls, which could harm our business.
- We are involved in litigation, arbitration or regulatory matters where the outcome is uncertain and which could entail significant expense.
Management Discussion
- •Net revenues of $5,003.3 million decreased 15% from $5,856.7 million in 2022. The decline in net revenues includes a favorable foreign currency translation of $20.6 million.
- ◦Net revenues in the Consumer Products segment decreased 19% to $2,886.4 million; Wizards of the Coast and Digital Gaming segment increased 10% to $1,457.6 million; and Entertainment segment net revenues decreased 31% to $659.3 million.
- ◦Franchise Brands net revenues decreased 3%; Partner Brands net revenues decreased 35%; Portfolio Brands net revenues decreased 17%; and Non-Hasbro Branded Film and TV net revenues declined 35%.