HAS - Earnings call transcript Q3 2018

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Operator

Good morning, and welcome to Hasbro’s Third Quarter 2018 Earnings Conference Call. All this time, all participants will be in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. Today's conference is being recorded.

objections, disconnect any this have you you at may time. If turn time, over I'd this the like At to call to Ms. Debbie of Investor President Hancock, Vice Relations. ahead. go Please

Debbie Hancock

Thank And good everyone. you. morning,

Executive Goldner, Joining will Officer. Financial take then on will and Chairman me the are Brian we Deb Brian your with providing this and Hasbro's questions. morning Today, Chief we Deb Officer; begin Chief company's and Thomas, and Hasbro's commentary performance,

was issued Investor this morning available is our release and website. on earnings Our

covered in also information adjustments earnings release Investor Additionally, The are containing presentation financial and non-GAAP today's and call information available website. measures. slides and non-GAAP regarding our on presentation press release include

included will A we and share. presentation. in these discuss today we measures, adjusted Please non-GAAP note call that reconciliation which earnings EPS, to adjustments. GAAP per or whenever per share, include earnings diluted is the Our of discuss are release certain measures to referring non-GAAP

I and similar anticipated forward-looking cause materially begin, management's or we are may results would make goals, that statements remind session you that factors the many statements. differ of There management events actual members forward-looking results and objectives in question-and-answer from Before or follows, expectations expectations, other expressed the to this Hasbro to call matters. concerning like could these during that

would undertake occurring introduce most I this We XX-Q, events or today’s disclosures. press reflect in factors date Some in after now statements obligation on Brian? Brian Form other like made Goldner. of the of set any are forward-looking public forth recent to those XX-K, release in report to circumstances to our call. our today annual our update and no

Brian Goldner

The joining team everyone. you for global effectively year. through Good And working Debbie. us morning, you, disruptive a Hasbro Thank is thank today.

and the and and Blueprint. major lower and teams new making a we The US to results broad Europe and also digital-first In third recaptured have furthest Canada holiday the Toys“R”Us US into Operating orientation Pacific, Toys“R”Us in US the inventory add more across by heading showcase also innovation in that profit progress had the markets around to retail the was and last of end. the the quarter. retailers segment up get for about US, advanced Asia to are but the revenues storytelling, revenues orders and shipped this and in are quarter, strategy a we the Canada making Our one-third quarter we didn’t we reflect of array drive Canada quarter in progress. growth

including a and to capitalize to affecting response evolving is like number retail markets, are and Russia challenging deliberate and environments audiences Blueprint factors macroeconomic consumers. these landscape factors and strategy of an global on with the our and there Brazil, markets While UK Europe, Brand measured our in

ongoing. put year certain for UK rapid one most ago, the Just In owners markets. new stores, and over select US, bankruptcy Australia, to Chapter the of is motion Toys“R”Us closing of a XX in this ultimately into including process which stores filed markets, transitioning in in transition all and and their resulted

next We this believe for continue last will near-term that a the few to is disruption retail quarters.

profitable ways differentiated of building to and brand position capabilities. to industry-leading To established invested we’ve need Our in company our Blueprint drive new enabled transform continuously strategy has and Brand for best growth, us competing. future we

point, the future. digitally-driven right have us capabilities critical and an play it this we right company. with a the becoming We’re more pivotal to into teams the in place is entertainment lead At agile, modern

transform, we which continue impacted we organization. our to took actions global As

growth. of costs aligning Hasbro this with and broad drive focusing array our plans holiday profitable to our resources robust teams strategic We’re executing on season of our most the growing areas is differentiated for a while and and profitable, retailers. business,

the the the which was for Following brands quarter brick in retailer clearly Toys“R”Us Hasbro down the in it slightly was liquidation is and retail, months nine of the for without first in low-teens year. visible at globally the quarter quarter the the third first point-of-sale through increased US, and

more stores products of where Looking first America, has to Toys“R”Us of the single-digits presence half first market to months year quarter incremental online. year. US, access in One year drove leading X.X data had a the Hasbro and unit months over units seeking, double-digits and of to consumer high US were ago invested online third brands the According this the nine Click they the increased the & Retail, increased through establish liquidation direct and closely, impacted versus North first at sales. the closings nine In on is the POS the sold in third the quarter’s Hasbro’s and Hasbro in Amazon the share a leader an million category. year Toy the Game through the

in US requirements. However, the to The efforts. retailers the their are that the away the by of new retail. chain. working to Hasbro's Toys“R”Us open with at the third industry But in end a recapture drives In Many new has period. a channel retailers greater to weeks, NPD be stepping Group recent holiday also strategy holiday would the market our XX% shipping during liquidation enabled for the begin We're set quarter at variety retailers But US their capture share later for supply indicates plans are shelves doors quarter. significant requirements data that retailers purchases of given activating have of differentiated Toys“R”Us made up share. this us number of their

toys quarter. including per product of carton retailers adds demand high games later Our and in volume the previously, more require take and more growing to than the truck retail cartons quantities to closer holidays footprint smaller shipping

were Hasbro shipped demand before, quarter. to fact, ever In than September products domestically within more all meet the the in and unable we

working retailers in to delivery distribution We're and trucking new to a meet $XX As shorten also quarter with including week times. we'll US our warehouse better ways quarter. million shipped XXXX innovative approximately the orders Midwest first fourth of reduce dramatically a to third mileage warehouse mid in result, of reduce space time centers. sharing demand, the closely our retailers’ By add delivery

While our inventory cost year our retail US versus ago. business by maintained declined footprint And is a across XX% growing, of we retailers. our have retail

have We for retailers business been Where and brands consumer support and period. years. successfully retail to and has XXXX story-led moved quickly, return the more importantly, in see growth demand products you disruption to of the to holiday the and brands. and mitigated resilience innovative expect future can our And the our transition retail we XXXX

previously Europe the the share the XX% decline with year happened, we struggling, take traditional of offset borders challenge rapidly both rightsizing For In end already inventory Asia transition yet retail Toys“R”Us example, the XXXX and Toys“R”Us were third and haven't other through are landscape revenues to added discussed, are of complete retail from Toys“R”Us and the behind We're inventories from shopping evolving progress and it down Revenues our will in Pacific retailers across recapture retailers. and efforts. respect has growing but the our quarter. our Europe, retailers at with online to over began are and making retail. Canada, to US point-of-sale Canada where transition. up in A are the excess for meaningful and ownership and where consumers omni-channel as retailers inventory.

Hasbro. several price new quarter, X% and players points platforms. evolves, addition and GATHERING, Franchise innovation across of and in the KITTIES, initiatives, portfolio broad and STARS channels. retail of Brands growing meaningful LOCK Emerging behind for leveraging and expertise We're Brands a target landscape brands, analog are of remains Gaming the POWER and BABY opportunity MAGIC: revenues YELLIES, for and MONOPOLY, PLAY-DOH digital consumer building we growth Hasbro were brands demographic LOST to licensing revenues global THE revenues. our and across including our RANGERS Global As a grew third ALIVE. differentiated up

in for Canada led segment, and in original strong launch in quarter. number October reflect in October week approach. to MAGIC: GATHERING Ravnica. growth, Core the revenues MONOPOLY games MONOPOLY the sales In new supercategory Edition gaming of of by Cheaters US. our the identified first-to-market Group launch the the in Fortnite double-digits fast THE NPD fact, story-led early in strong grew ending and of continue Fortnite The the as and driven were the have a and and MONOPOLY up Guilds quarter, item Set the one X US

as the is Legends TRANSFORMERS also first continued and portfolio Retention, of quarter and of Sony Arena analog Infinity game's based all franchise tremendous and competitive brand just well In robust digitally in of and including addition, game. markets, steps War all late to has of for ahead rates for month, Arena delivered on Beta strong revenue beating September premiere the DRAGONS MAGIC: release on the taken alone, Avengers: card The our another initiatives Panther monetization GATHERING Brands, and are launch the Animation. the film team year in DUNGEONS million engagement players. features streaming MAGIC an new THE goals Beta targets. is The In new In animated XX viewership the delivered our has first and results gaming XXXX from There this incredible and expand third a for response and quarter, played. been beyond. digital the of Into fan-focused investing an important start. December games four merchandise. as Spider-Man: console and and Open days to trading of toy the quarter and were Open Spider-Verse Product social above moved the tabletop strong behind team XXth. positive growth this and from for platforms. mobile third is and drove extremely and having sales Black Hasbro's sales a as as host Partner The in MARVEL Arena product a launches from team continues across marketing expands are the

We Deadpool, THE also ANT-MAN WASP. have new Venom AND products and supporting

strategy launches Marvel product In at with as was year. exclusively in on animated Wars: its Wars MARVEL's in to growth that this line the addition, contributed quarter. shelf Jedi new Last Star BEYBLADE first Rising newest month. product product Target The franchise of digital September supports last for Star declined also revenues Hasbro's

to begin quarter with the are film off we For on and start. revenues and globally. to outstanding. promises audience film enthusiastically arrive shelves a initiative, Bumblebee was season, screenings have feature In arriving Paramount, quarter Feedback in TRANSFORMERS increased most the initiatives innovative to sales this our and rolling has are which our will double-digits. dual-gender theaters holiday in TRANSFORMERS be quarter partnership behind fourth from been Product the Canada and XX. early fourth diverse out the all-audience, In segment, December strong all-family US ever. brand Retailers

innovative number Franchise for Brands holiday offerings brand a well of Gaming. significant Partner arriving this across and have as We as season

representation strong initiatives toy NERF, digitally, we toy for including online Overwatch list. such including books entertainment in Lines. This unveil retailers and Hasbro's see new content, To marketing stores, as future commerce, of includes tremendous social NERF all shoppable growth, innovation as In have their story-led product for and will innovation fuel converged fact, content for retail, initiatives you mobile to consumers in across holiday and and XXXX. our in Brands Fortnite Franchise all NERF and forms in

across experiences Disney robust diverse drive both of We slate which gaming will digitally company innovative touch, brands, face-to-face. are and and entertainment a demographics Walt supporting we the many

XXXX more We early plans our on year. will share details next

XXXX continues audience in seismically and we shift, to now retail continues like consumer are Deb? I landscape turn call to positioning would the to and global the environment and rapidly beyond. Hasbro profitably Deb. over to evolve the grow to As

Deborah Thomas

good everyone. morning And Brian. you, Thank

complicated the year to margin global clean royalty, and to limited exchange not costs. a negative efforts challenging clear through lower manage and ago, A XXXX and less retail lower profit up our this foreign to administrative environments quarter. other team inventory in our offset held favorable and Despite the revenues Europe, Europe Retail well impact challenging dynamic including Russia a As to which steps mix, disruption, the inventory with progresses, impact and revenue than combination of of operating continue Brazil. advertising end environment. our global has markets teams Toys“R”Us is UK address operating year in and to

we fourth forward, to we severance. Hasbro. have the Based of right discussed, million in continue record grow expect $XX Brian to As going to on to to organizational a $XX talent relating the transform charge and actions capabilities quarter this year we ensure profitably million a to

We’ve it While will million brands to and in the share ahead annual of shareholders repurchases. remain part future by is in sold investing see of growing our are year also cash $XX and well US to right is grew to thus segment Hasbro on million talent performance. in were drive double-digits operating through continue the Brand We Hasbro marketplace importantly, team. $XXX XXXX, of far and $XX returned under declined our Canada Partner this in now the revenues slightly. us. for liquidated. in and we and dividend revenues in up segments, focused Brand business over the will this entertainment success long-term million now evolving was declined with The and the most Gaming result savings ensure we early and the XXXX Within quarter. new Franchise ownership Emerging Toys“R”Us Canadian the the in X%. US positioned Brands fully revenue

early tied including region factors down transitions. we revenues account X% stores a closely are contributed exposure Favorable Toys“R”Us remains up year-to-date. mix filed of recorded no for with last U.S. improvement Toys“R”Us. Hasbro both operating profit this point-of-sale profit down margin was With less to rolling and million now, International forward the million and ownership Brand year margin. and bankruptcy. segment for increased expense continues of year, XX%, The landscape. several working quarter. Sears was lower in as them liquidating and the Revenue shoppers retail US Sears overall impact each debt year. Toys“R”Us and and in for in debt France brand decline. we $XX in quarter revenue expense XX%, last operating Spain positive in and low-teens revenue represented yet Importantly, Canada revenues exchange. the forward out, change bad was quarter and meaningful declined look undergoing are to Europe is to Retail Emerging managed And down X% in immaterial was closed quarter but transitions go XX.X%. product the $XX.X segment the bad with of declined we the them during point-of-sale the reflecting the last retail Absent UK with Lost aren't than week evolving contributed doing to foreign the inventory categories we our still significantly. operating the royalty associated are impact Toys“R”Us to business negative while time. declined. third some activation when is the from quarter the other periods, In retailer of the have year-to-date. completed. increased, portfolio revenues

Asia, Brazil. this across also We We made the these aggressively of negatively end economic working work revenues believe we $XX.X devaluation Toys“R”Us environment negative in than Asia $XX.X retailer significant Europe especially increased and Australia the Pacific, impacted half quarter team quarter slightly to retail In will by region. behind on impact strength The progress accounting the the Point-of-sale in in to Currency impact has is revenues, more for our of and operating America, continued is we longer up inventories year-to-date are decline. lower our by Mexico. not have continue the through as a and of negatively is sale shipments but the share political recapture forward. In has million XXXX. Latin as operating, efforts completed. been issue Currency no and the ongoing. go Toys“R”Us results, the business the had yet limited In is impacted will million.

poised year, health our factors extending the and segment, facing to retailers. negative certain quarter of a to also Currency to a decisions is Pacific's Across in XXXX. TRANSFORMERS launch the Bumblebee fourth credit difficult Asia $X.X capitalize revenue. to International strong and continue is business the million last comparison impact retailer had but with the macroeconomic around impact Asia on into

it resulted declined operating improvement our drove has an Licensing increased the International XX%. in profit revenues $XX.X Entertainment the with inventory in segment profit. operating near-term. our clear impacted DSO, revenues and this combined revenues to Lower to While million. in higher in has costs segment decline

and increase. every quarterly we the During to XXXX. the a also a film agreement share few Revenue XXXX in the streaming such quarter, signed was from revenue years our we This Hasbro happens programming. added television Pony Little digital theatrical My multi-year last deal of signed for

adoption spread favorable on segment. each revenues XX% The new XX recognition has and In the to This standard quarter segment's to year the as addition, operating evenly throughout more profit costs. impacted standard mix contribute higher the revenue lower year. higher the in operating continued of this declined points. basis revenue Hasbro increased margin Overall revenues, profit

full year a year-to-date Given trends, we anticipate operating versus will margin decline profit now year ago.

profitable grow believe XXXX margin are a quarter. over revenue return basis from of sales such associated as we foreign discussed, can and mix out the ensure Brand and time. we of growth we gaming to taking revenues in as profit percentage can and lower increased as steps Cost product with we offset the MAGIC: than exchange. in Entertainment XXX operating cost Brian to brands of higher well Partner points revenues, revenues clearing in Favorable the more by As as GATHERING, certain was THE Licensing inventory impact

this of in loss higher year. As short-term delivery last retail current will with declined lower percentage latter and RANGERS our Due Bumblebee million content. production we increased is combined inventory production of to amortizing increased Partner expense Movie we expense in margin. next Toys“R”Us begin on amortization Pony: expense fully the began acquisition, quarter year's of assets of quarter, amortizing impact on amortization in funding we incremental our Europe gross we're million pressure The year expectations, other associated in we Royalty half production a in approximately the having and in Program $XX as revenues. our fourth $X intangible POWER Brand amortization the anticipate as dollars this XXXX. amortized. acquisition. of was to Little in offset discussed The My primarily continued which now the amortize are partially the with Based by on to Intangible addition costs as digital the increase film a of

in and of the flat expense, lower exchange we and as a now compensation positive expect expected million incentive million. full content impact XX% year decline a timing translation. tax down debt SG&A to in $XXX reflects revenue approximately the foreign bad from change credits, lower $XXX spend percentage The dollars Given of receipts on of year-over-year. was expense

the other We foreign driver expense gain on this loss the to costs operating profit, XXXX in higher and line item. the trucking decline, shortages. from in exchange this shipping see this new versus in continue pension Below recorded Several to including US year items decreased income regulations contributed and in quarter. now being a

As expected, long-term our global our our as need thereby using are borrowing interest expense we cash effectively in short-term favorable and declined borrowings. more year-over-year executed XXXX reducing for

tax Our was income. XX.X% year events for rate of the last absent reflects previous to increase US and of year XX.X% rate underlying the due to guidance an a mix benefit underlying discrete full The tax reform rate and from geographic our lower slight XXXX. compared XX.X% of

the benefit quarter. the of $X.XX to that we be XX% third the was or above guidance tax our During our now during related share million interpretation our of per slightly We recorded released tax reform will XX% US previous tax high-end full year $XX.X range. to quarter, rate a believe

on and shares acquisition $X.XX. other $XXX.X RANGERS closing, per stock Properties. had X.X million cash we excluding POWER months totaled the $X.XX third cash closed quarter, Saban. million the approximately the tax our earnings For quarter. paid was flow of per in to $XXX was of mid-June, Operating and over million in entertainment reported we share approximately past In and cash from common third million XX the the issued at Saban assets $XXX share $X.XX. benefit earnings of At we end Adjusted

due XXXX. cash remaining million $XXX have payments in We of

in and $XXX.X During shareholders, in million repurchasing Year-to-date quarter, million dividends the $XXX.X to we including third $XX.X million million. totaled common stock. returned $XX repurchases

in Our RANGERS share the connection are POWER issued repurchases partially full to expected the acquisition. year offset shares with

outstanding open opportunistically X.X respectively XX% debt-to-EBITDA day to decreased our strong. market. Hasbro’s and our We sales targets. sheet balance expect at remains X.X Both and Receivables days. XX in remain to shares the and continue ratios EBITDA-to-interest within repurchasing decreased

declined inventory X%. the season. brands Hasbro-owned XX%. of support Excluding for decreased million $XX.X demand exchange, owned Absent we and well-positioned foreign are foreign increased impact receivables inventory of exchange, holiday the to this our impact

are As discussed inventories retail US in notably internationally, and in Europe. down earlier, significantly the

successful to experience XXXX. in environment, are all holiday to innovation We to our are deliver new brands, Toys“R”Us portfolio to we across beyond our period business, accounts retail rapidly adding the while and for profitably new positioned years. us In future and in grow move a introduce positioning grow continuing to strategic changing ways

to see initiative, excited head business. investing challenges call in growth the the We to remain our open we and entertainment by questions. on making We’ll tackling now we’re XXXX appropriate timely and for and innovation our focused long-term changes and the on up We’re for and business years come. in

Operator

you. be Thank this [Operator session. question-and-answer we’ll time Instructions]. the conducting At

Goldman proceed question first your with Please Our line Michael Sachs. of the from with coming is Ng question.

Michael Ng

Great. Deb. Thanks for I one for have the Brian one and for question.

it have expansion you margins, you margin be two-thirds? in Toys“R”Us holiday. to Could and Brian, does in think this all year. revenue the if the mentioned the And EBIT I over so, bookends capture just Basically, time? a in Will being that into XX% do on XX% operating captured some do long you worse? that EBIT Do how you for you XXXX? it on third about Toys“R”Us fully margin recapture it’ll expected expect question you down range XXXX? take happen then the decline? revenue to XXXX is Thank had For And going or guys remaining XX% between you. the Deb, expect put or a of And still just

Brian Goldner

Thanks, Mike. Good morning.

we’ve talking begun quarter year. we’ll this making fact, progress the kick-in what On Toys“R”Us in have the made we’re of additional in we've we've retailers a progress up difference. last US, the new retail just and the and the holiday year more XX,XXX been year about And XX,XXX fourth continue to opened last business plans plans of the recaptured, US see in doors and the as their that the team has tremendous XX,XXX added just -- to added part with share more over that’s the over of seeing robust We’ve as come.

allow to channels, on their This next them that development So plans really major you'll a product retailers, and price continue enabled strategy. us but at also work of to with announcing points. based weeks, to expand to us additional over robust continues our the our see channels product multiple develop launching number

So into as we believe make continue up go certainly the we'll Toys“R”Us we XXXX, to difference. to

XXXX Our make in to the Toys“R”Us difference up not necessarily year. goal this holiday is

In fact, what we're setting working relationships. level And commitment through retail on with of our retailers new we is strong to with higher ensure level holidays, higher the in those up that we XXXX. capability support have retail get to new of a for sell-throughs us a and

very into go the As about we XXXX, lineup. we're enthusiastic

being have mentioned, strong year franchise. as making we across Europe, from to comment profitable and to we said, we And but coming bring growth. will going the specifically see believe going we initiatives stabilize -- growth. And partners new new be a to Toys“R”Us in to I'm XXXX up XXXX Deb that as certainly growth. to will we we forward we'll And on we're to return not of We franchise, this will committed I very believe initiatives return Hasbro we'll as gaming. as growth continue

Deborah Thomas

that year. the last of with have would profit QX, profit line still as our far revenue for operating of we that delivered ahead talked of in were year and in we majority our had about a us. As plan the margin, kind operating margins when And we profit had July,

feel throughout we look just bit expectations a that close-out year, the Toys“R”Us it's worse impacted had do little this them gotten brought Brian sold we talked bit higher Typically a thought. are bit retailers other have. up forward, as we we US And the there the more our than margin that. through those too. we year. had good to would that, out have Europe took committed we than Canada thought We are we on As margin inventory, a and clearing but segments these too. remain going pretty some margin and gross a of that, track bit. elaborated a close-outs we that we would on clearing And are down is our about on that's the quite up those, retailers have about issues We've

our to traditional margins retailers. continue have gross continue carry it's expect. margins gross that we -- So the not Those would to

expect based So of on profit expect just margin the see rest what a products mix, we for year, the than the year. would and lower mix of we we the last operating

We specifically also to in highlighted million this taking severance. fourth the we're going do relating of the some $XX $XX the We charges quarter. charge take quarter, fourth to that to in in expect the million be case,

However, underlying, nothing profit there's operating -- in that grow cause no that can will not we us believe future. to the

performance working more of this a in is for good been through. us US. I it's the seeing its but think there's a Europe We're bit transition and a year of way of transition in than thought we

-- the positive we remain positive about about very future. So actually

Michael Ng

you do this is to whether 'XX about comments margins have or it’d And point? down tell Great. at it too or or any early up be

Deborah Thomas

we certainly And for items line they'll at control the No, and because for you XXXX. that’s continue our report this to development, we disruption future. invest we I from say think royalty a in in we as you the from even continue the P&L would that we where our costs be despite expectation production to for said we're investing what know revenue, if quarter, our standpoint, look we is up where standpoint, product

are our cost line well. -- to investments our So and as in and keep make continue those we keeping

expect in reason we is wouldn't to no the So increase there why future. that

Michael Ng

you both. Thank Great.

Brian Goldner

Thanks, Mike.

Operator

go your question questions. MKM Next Partners. is coming from ahead Please the Eric of with Handler with line

Eric Handler

you thank Deb. very you, much. things couple for Yes, A quick of

like to versus come area increase have sort into something more X.X% as down that percentage or going future year, like the area. Is a to you continue a a came advertising sustainable seem a lower several last bit advertising revenue that way of on is year-over-year How that as of that this basis. of can to X.X% get that First, is products as than percentage tracking in out? And the on year. -- revenue

Brian Goldner

Well, developed the we're saw media. the like quarter also where our to plans getting expanding that We're trying let the we better saw that. about some targeting a at bit third a where support using We're fourth were savvy leading markets. better brands how been new and US in in Having establish social at dollar do a we're digital lot expectations to and obviously economies still talk and for as me time our other the part holiday our economies and retailers able levels in seeing orientation do we're our that, spending retails decline build quarter media to be you with get our season. market believe the brands into has What -- more XXXX and talking world. beyond. that lower scraping and initiatives of in range their But that listening would X% are getting see XX% range, end probably really in we've about that said and you'd to at and new to both that advertising around and I efforts

Eric Handler

increase entertainment one got then question and business license you. the in And revenue. other for Great. Entertainment, a nice

renewed? from is was that years four reasons -- that ago the now of deal Netflix One fully the is

Deborah Thomas

last digital look we streaming time a Movie. are from we renew also Little And at My in As getting that from our did was it, did. ‘XX I The had think deal Pony: revenues we we we

there are through coming revenues that but that segment. see amortization, in production getting in you our program So we

Eric Handler

much. Thank Great. you very

Operator

Arpine your The with UBS. line from of proceed next question. Please Kocharyan is with question the

Arpine Kocharyan

morning. Thank you. Hi, good

retail. Toys“R”Us mentioned toy a could take to Is more inventories a for retailer retailer. specialty that give were You down mass And is able on ex-Toys“R”Us? retail what than at looks Because actually How there bit like us chance a that's They were down significantly season Thank ex-Toys“R”Us? then a I holiday time follow-up. a inventories sensitive. of example ahead much little is you. inventory have quick you

Brian Goldner

are and So we’ve down seen our obviously obviously impact European by XX%. US Toys“R”Us inventories Europe, if are in than inventories inventories of the that across more by retailer had you -- board. down an look at down less and the XX% are retail our retail In Europe

as Recognize, retailers other part our week you're changes by working in both Europe to the moving and supply are more the across in Europe So we retailers update brands online that taking to down. and fewer online omni-channel as in our new US retail those is less week and take both are retailers -- retailers, supply. progress are with inventories made and omni-channel very is in cases eliminating the making good retailers excess retailers and and and we actually those inventory

So as footprint supply. our channel week as retail expanded take partners, that big less well

our real retail across business then Toys“R”Us has are these some and impact. certainly So reductions

Deborah Thomas

you that I Europe our look inventories add well as Arpine so. at significantly mean too. And as down would especially just are I to

Arpine Kocharyan

function QX have well thank whether a brand sort -- you. that online, Okay, doing change structural checks QX. which could some just shown the you so well? did doing surprising NERF of Or QX willingness some it’s better, that it’s in our us that’s last is terms more remember? it mean inventory give time online of take the are more year sense management like a tough in seeing bit more to Then softness is and we since little still are in into retailer Could items seems comp fit I because that of just in very could be it on for bulkier

Brian Goldner

The ago XXXX. supported linear NERF rolled in inventory in the out began that now originally is represented in US of space QX NERF fact to was impact year Yes. a that and feet biggest ago. a which significant the Toys“R”Us globally And year Fest

that unit round the certainly second impacted seeing particularly growth What product, in In strong projectiles. are we those quarter Rival down of QX basic addition, products. are up the the some QX, of the is in liquidation then in were around and the sales

seven launch blasters QX. in seeing launching new We’re -- a

and about well so looking innovation getting the get access that’s we’re as for the The products brand clearly very out NERF to perform market new does And excited to quite online range. as directly you across indicated well. the they’re also performing people

competition long-term few in But add good some fall. to have we’re noted category. that other this NERF. feel competitors going innovation we So seen in the We’ve continue to people a --

XXXX. in whole coming innovations NERF which then and the new lot we innovation of then box innovative first in new And LASER later OPS, to we’ll new we will NERF with out ‘XX Overwatch of have coming half including additional play have have a Fortnite. you NERF We great for with play. is way of a share that And

Arpine Kocharyan

more terms investor marketplace, of profitability if expectations your Thank as and lot MAGIC: one in you Hasbro you about there And in for THE both Brian, of could both mean the and ‘XX for community may. revenue? went incremental I recently. Could of well a is you. excitement as what as Arena, GATHERING Open share that into Beta

Brian Goldner

Yes.

about year-over-year, interrelated start related driven I it’s up all, should story-led GATHERING, XX% Core seeing we MAGIC growth We think brand. of because and a launch of talking First new is MAGIC: from unique that also all growth it’s players July. THE players as by obviously by really is year-over-year. XX% we’re a in Set year-over-year. of that saw of total it’s what But

a THE MAGIC: is good but really fact Beta. is we’re think Open off I So just the Arena to GATHERING in start,

players and We’re work is we continually not as game done. actively with our engaging refine the

in invest game development. to going We’re

to positive Twitch. there look would and new on features Polygon we're publications. going to what features it and at other platforms about expand have at look PC the not really XXXX that to some platforms. in you to going and excited Arena across with reviews in We’re and viewership I social few competitive to out for encourage continuing you we're a the to portends in encourage I new and frame been also, say Gamer other and And We're beyond. markets, than very of

THE first Pro the GATHERING since to launch provides to And part we're fun digital to as And competitive the MAGIC: of that's amazing gaming Tour Twitch. going to I MAGIC: much game DNA is on real in been play. think already, watch new this XXXX. platform add course, THE in it will of elements our but Arena MAGIC's stream as and you're GATHERING officially seeing has XXXX, excitement as

with expectations. our And And start. more it's shortly, exceeding a you it's to so, good but very off we'll share

Arpine Kocharyan

you. Thank Great.

Operator

the is The next proceed from question line Please with of question. Steph Wissink your Jefferies. with

Stephanie Wissink

we of the end question a be everyone. you've smaller Europe it's versus toward comments QX continue we through wanted impact the you just to Brian, to sense of cleanup? what understand the inventory. or than partner of back Good for your come Should wondering us then expect on the I'm going Thanks. are just morning, I you the a and NERF. QX. give the but I larger And getting on year, to brand can if just fourth experienced tail-end Deb, quarter to that in QX?

of maybe a If or point some changes and non-toy and other distribution sales cadence Fortnite, goods? new addition in would or just Overwatch, footprints, do to into distribution channel around helpful? non-traditional in areas that understanding bit into that think a mass I Rival, there's areas for could you distribution focus, bit the to the brand be that with entertainment gain about talk little a retailer you. NERF of sporting your Thank like toy you expansion expect

Deborah Thomas

morning, first. take I'll Steph. Good the question inventory

I deal XXXX. committed that Hasbro, this at with and remain we both at we in retail think to look as inventory, issue said at we our have

to that. from behind is end we we So, on to from will or just absolutely I do done. it be the by whether gross our And believe remain But up can't XXXX, quarter impact of the committed specifically us. down the going getting say fourth be margin that

Brian Goldner

that But points certainly, if adding you're we new are NERF, that then right you absolutely NERF is of at everywhere. And Alright. Steph, look resonates distribution. a brand significant

as expanded on of come of retailers, and an new the good retailers. We fan-type retailers, board, gaming array have sporting type some who of channel retailers electronics of strategy, our including part have lots

game not in game -- And Toys“R”Us last and do very strong real NERF year important and just note the As launch. the overall, about excited for we'll to ago really we have to it's But prior of but in the blasters, later liquidation. year. character-forward, business would continue. quarter they that of that. we those And behind in Hasbro. was storytelling we NERF into continues QX, Fest. QX much people that very they only to into restructuring It we then highest recognize it's Hasbro second role any largest blasters, very life Fortnite. QX innovation Again, footprint think life, outside about a were in their and Toys“R”Us expand. play very share when get do some for of excited it's Overwatch, And the for based NERF's that And because closer we're disruption believed get I the Then when and It year to new to allowing great we'll we're brands last to was was was on Toys“R”Us NERF play bringing talked we XXXX. then that we're for innovation QX the

will well put to goes it issues excess year, so, inventory But European as And back the where be. as we we this behind impact the as finish Toys“R”Us. us

Stephanie Wissink

Okay.

just calling should as magnitude heard for modeling sales be QX total about Just lags Was us. QX. out I $XX other I you you think of basis? there want QX versus think tail-end any correctly. of one final order million question into that just or on worth to terms would QX a timing we shift shifts A sure of make in

Brian Goldner

the universe recognized that were us several quickly which to replenish, expanded cost already innovative impact. And sharing it mileage of we distribution had we to new seen. of and also are will very we enable such going some retailers our a gives again, inventory. retailers also Yes. monies warehouse. already supply approaches helps And given retailers that And a to to to we with going underway of week us there. where to move mitigate some centers That Midwest a establishing other an retailers' to It's reduce in an was should team obviously increases warehouses, save opportunity the can some innovative lower some It are very we've try well the our approach. the

again through in go put as you're US. that And we business we've momentum capabilities so, and the is of our the these in again, see follow And US disruptive in that's on seeing and rapidly a time marrying up many and the board new on the North what We're we're this seeing the do in quickly step brought this America us we And real year, in to Toys“R”Us European that business. capabilities. successes and will Hasbro behind. so Europe

Stephanie Wissink

Thank you.

Operator

your is Hendrix Felicia from of Barclays. proceed questions. with Please question line Next the with

Felicia Hendrix

Hey, Good morning. Thanks. Brian. Hi.

a you out of guys look if Franchise at -- kind actually faced Hasbro that where I came to various the that in expected when well, of and in headwinds than Deb Gaming. clearly on laid to not us there, you were talked some July. the you you Just expectations stepping relative a really in quarter you in back at those those better the second, of were for maybe basis in But you came think out Brands and some obviously, revenue have least,

miss seemed to be significant And Brands. Partner so, the real declines in

that and you was retail commentary and just your I issues I'm with could that if there by we that you So, both wondering because segment? of affected can inventory into then just wondering being understand mentioned, levels the if overall are kind line what company in happened disproportionately how exactly layer

Brian Goldner

Yes.

absolutely I right on. think it's

Beauty as repeat this some setting. In television the that Partner were across we initiatives brand, number Star Jedi on that year, entertainment Beast of supporting and a Moana you didn't year, including really if led the last and Frozen, Wars, had Disney well last on was remember, this year. fact, was In and Last as the Brands when focus -- go year-on-year first and Princess let's initiatives product

was brand. was around going So, and on merchandising a sizable inventory the there amount of that

year. so, wasn't time repeated this that And this

again, So, the that others. had business those we two year, impact saw a major come And over few to some of and off the from then Trolls time. impacts as you that movie

Now, agree but we animated fourth offsetting the but which ago. and were we'll -- the as Black course, very not business. excited entertainment we've have quarter, can't about from performance MARVEL our Panther, the we we're very do We're against about. get Spider-Man, up momentum into excited of Bumblebee that movie, Avengers year the on The then, seen support which I of initiatives mention. only help a I film, major And that, we'll but strong own

Deborah Thomas

we into head And as …

Felicia Hendrix

what to get … Well, I I'm guess trying

Deborah Thomas

Sorry.

you've Spider-Man. course, Aladdin got X, Lion Marvel IX the that we In from XXXX, into and got end entertainment. As we've Story. see Star Frozen we Captain Disney, comes MARVEL, King at next year. then Wars: There's And and and and Toy continued another head around Episode of there's momentum then And of Avengers.

got mentioned good about year think great and in I as the momentum And well. you we've Partner our in mix entertainment some seen next carry momentum to MARVEL. entertainment, good we've as So, Brands

Felicia Hendrix

territory, the surprising. of that was the unknown come so But that. kind talked which I of that all navigate seem right. were But of at It's you happened guess to some just end of kind changes what for through you to you kind in have Brands, really quarter I there things than helpful. trying other of wasn't Thank that happened in -- kind not about was is the were to the trying anything Partner day, this planned. get to in likely like it I’m

laid Brands were and out just you so, why And Partner they down.

I I of that have you would to than had anything some the related that inventories But or Brands would would others? specific anything there think normally in would have the Toys“R”Us kind that was declines hit harder Just Partner have quarter. mean been or

Brian Goldner

these major up we're against initiatives. No, year-on-year, I think again, that,

initiatives. people lot to also against has fact the Toys“R”Us up entertainment of I disruptive and being year Toys“R”Us a notion a disruptive in attention I ways. focus missing the on we're is think and the of moving some guess that

-- year. the were was Brands this look Gaming point it's if Franchise -- were company up of up really at think transformation I Both Brands double-digits. important, business, the Franchise it's up. and through US Gaming leading for to us a double your you

as do other we of initiatives our a inventories, also we're company Europe are are but Europe. Partner inventories Brands all on XXXX, where with particularly And overall. And entertainment I then, there inventories lot of Brand any cleaning for But Emerging remaining Brands well are in across focused up said. think brands. cleaning reason. from of entertainment-led alongside are Partner brands up good Europe have our up course, particularly Deb some of around down And we Our the in

these have issues conclude all finalize we the So, of by a year. real commitment and to end here inventory

up set a our robust really for is very Partner Brand across well So, entertainment portfolio. year we're what

Felicia Hendrix

Yes.

you. Christmas, a for consensus agree kind call of Thank point. And at you seems revenue Okay. growth. then that? That flat optimistic with for estimates just this Do

Brian Goldner

think season. holiday think look, heading I we're a I very strong into --

have of We new lot initiatives set a up.

of is as revenues be both situation business. sell-through because goal Canadian our in mitigated continued as we it that was there’s had because QX again, think We was the sales mentioned momentum up retail in and the new will Toys“R”Us. I in American sell-through. And the ownership -- that the North well business

think you Smith's it business. when brick the taken following what quickly are our resonating whether Canada Germany, Canada like. online seeing has in So, the that really out and with sales whether you you're disruption, brands rather I see looks you see is over consumers, that Switzerland to Austria, It's get what now and of

quite as is So, go transitions, strong. we through these underlying our business

we've are brands the Our of that, by for us excited I followed Toys“R”Us was very are to get as year in disruption Consumers good. business. about we're through largest got Toys“R”Us doing. mentioned, just what last QX. the It's QX again, And

Felicia Hendrix

fully And you remarks, quarter quarter, the that I by would your would expect of said then few more you Toys“R”Us prepared 'XX. know take still Is first said offset in you realistic? a last quarters. it to that

Brian Goldner

is takes Toys“R”Us. business Toys“R”Us resolution in delay more a a been the reason of we there's of Well, mentioned Asian the few that quarters the

Asia and trying still resolve are Toys“R”Us obviously, Asia. owners best two -- performs And the around to the is know, differences. you world frankly Toys“R”Us As and their

it that But not for Toys“R”Us So, new of liquidated why And because, resolution. time, their it to where that's the ownership. we'd subsequently waiting may there area in liquidation. announced we're at take we've that we remember And that move also did shipments couple quarters. that's for in forward out year, have like had some to to an again, other Toys“R”Us and that make US continue us a markets that with left last QX

quarter impact in quarter. and we the are So, this fact next biggest again, much we're at QX were year a is, versus business XXXX. just, ago certainly The level framing for albeit And with people. Toys“R”Us, of quarters in lower of

folks. than again, framing out year quarter it is ago. less was quarter just for this Next a But

Felicia Hendrix

but quarter probably So, first maybe by dealing US fully through second quarter? Asia, then with

Deborah Thomas

Well, I think there we so. and the management hope would

Felicia Hendrix

We don't know. Okay.

Deborah Thomas

about this bit the share. are quarter taking is transition to paying is this the resolved are ownership orders we only new up anybody would just thing longer taking The say get beyond Toys“R”Us than anticipated. It's retailers seeing are I that a actual these

cadence want Some when of close bit it's -- they as the is how a to them it. different they take it just

beyond a Toys“R”Us. only from just would cadence So, we're Toy that. more But that standpoint, And thing looking that's at we'll talk about I at Fair. the add

Felicia Hendrix

you. And then quick I XXXX? Thank we rate across to tax for XXXX million we then and housekeeping. Okay. XXXX? use And should about million the $XX should just how savings wondering just $XX think in was Deb, spread what two

Deborah Thomas

year. XX% XX% talk would -- rolled Toy XXXX about for when slightly, get any say mean guidance we I haven't tax actually for I expect the to given this right yet. we'll we But now be slightly at above the say more together, Well, for to I and until budgets And slightly all rate Fair. our that we

specific. that's the other use think … completely I for anything But 'XX -- sorry, of question and because I'm to absent thinking estimate a as lost fair I part was more the about well, I

Felicia Hendrix

million should $XX million Oh! How spread savings to 'XX? in the 'XX and we $XX across

Deborah Thomas

about me thinking you the rate. about Felicia. Thank thinking I you. 'XX Sorry. Oh! tax tax rates now, got And was Yes.

Felicia Hendrix

I'm just that. excited about

Deborah Thomas

will tax expect But $XX government the of clarify some XXXX, say have And I add million early XXXX. achieve to the million, by no. with out morning. rate Always run you we the $XX absent -- because tax reform no, in US in would head more. fun my to comes again, of it to phasing-in this that full else my to But anything see

And give that on of Toy some of it's phasing as just we'll guidance a when bit try to get some to Fair And about we timing. more just well. the

Felicia Hendrix

Okay.

'XX then now, in For just fair the it like something be in we spread XXXX rest XX% if or would and that? it

Deborah Thomas

and XX-K at guidance We'll in Toy our Fair. give more

Felicia Hendrix

you. Thank Okay.

Operator

Citi. from question. proceed Greg Our your the Badishkanian Please question line is with with next of

Greg Badishkanian

I right? am ex-Toys“R”Us globally? up -- if wondering POS you that hear Thanks. I was Did mention Great. that did that

Brian Goldner

Yes.

Toys“R”Us quarter year-to-date. year-to-date in was globally POS really without take In -- if also And Toys“R”Us year-to-date. … the because globally. that's in So, the the Toys“R”Us, was fact in up -- without you POS biggest yes, POS up US, and including impact up where was

Greg Badishkanian

the quantify just it I'm ask how up going much No. to to you in US?

Brian Goldner

Yes.

Brands. single-digits across So, Toys“R”Us. up single-digits Toys“R”Us, was Again, the year-to-date, And our the if in category. without board it across in And you take, up Emerging Brands, the up to every it's mid Partner it's Brands, quarter. it was Gaming in without high

Greg Badishkanian

And Brands Good. you I detail Partner entertainment know gave the Alright. some on impact. and

In one any terms Franchise or terms you of surprised retail Brands, was your two brands performance? of there company-owned that in

Brian Goldner

that of continue great we've most scraping social PLAY-DOH. seeing we're performance footprint to new Well, accelerate. consumable and Really digital product at with brand well. expanded social points. starting with It's of very and orientation And our performed the seen we’re that as innovation using Really like and drive brands has listening. global to momentum brands brand very new price one retail our channel array build marketing a

approach approach all I up US trend was up world. in think the and it's the was again, It way new brands in innovation. sizably our we it the our So, around but

as and in lot of that we new everyone also channels in -- can with of so, a online one participate but fun, our innovation, retail the the then to only of brands brand. And a sorry. quite footprint, growth retail sizable growth creativity, of not goes And as addition PLAY-DOH's expand it's

has addition, about considerably quite that. the driven of KITTIES and Edition. segment seeing growth the about lot to well. was people original business. quick Brands We've others. excited in MONOPOLY the business brands and what both GATHERING talked Cheaters excited of behind have again, emerging our very But Franchise response very new Gaming initiatives a great initiatives, call our And In about strike also our is and well. like YELLIES up and brands the we're LOST are performed we're the we which MAGIC: THE quite in doing

Greg Badishkanian

you patterns color. usually think helpful to just do go Toys“R”Us go for does running year? kind the So, that That's the on gifts of was then thoughts any Alright. last-minute to this Good. get shoppers last-minute ahead mean for Yes. place that that gift Christmas. purchase? for for the finally, Thanks Where What out. year? shopping of the And

Brian Goldner

say has of all job with I'd in our done fantastic retailers. team a our working

than retailers who August. toward the And fruition come we retail quarter fourth the very last about seeing quarter. third in of end do spoke we as As toy you to we're excited major partners of those were have or midst we're product them merchandise a Many the the we're holidays really space specialist seeing And quarter, our July in those now, at we plans. and beginning would presenting on to later just shelf expansion enter and the of retailers.

we're You're in-store bringing experiences, exciting footprints, lot of very to see expanded a online digital going very marketing where forward. exciting efforts

the once eight life portfolio. come see it's that's a sizable And get going weeks and so, our our we into ago quite see, to I to think very the mentioned that last year you're to And industry across I these as very earlier, a linear exciting footage to year. of comparable toy brands for

Greg Badishkanian

Perfect. Thank you.

Operator

The of with line Katz with next proceed the Please your Jamie Morningstar. question questions. is from

Jaime Katz

Hi. that about. strategy I'm forward-looking some about you guys morning. Good curious the talked of

consumer You Thanks. you top discussed or offerings interest product in the offered. guys than past? be the might of to be more then mentioned that spurred behaviors in these in modernizing were I'm slide digital purchasing interested what there's that guys that seen have priorities sort something the just deck exactly if And you and talking are And And and the more shift wondering the the that changing organization. global also that I'm online seems secular to by we in hearing what of for means that strategy.

Brian Goldner

of doing ensure available that for social scraping our and at to a brands and across was development, business seeing those product we understand look people people area, the for the online stories how go way algorithms in design really those out our optimize from every and you're and to on great about every group responses ways putting that marketing consumer. one across Data for way but screen, change we not the the that and the social social only on part form products through and are bespoke amend company. to replenishment or communications respond immediate search digital understand Hey, and marketing what analytics that how digital with do gifting, is all we as are great to was to the way have ensuring media, it to short be working storytelling used area transformation embedded content. marketing in company. and And also we're marketing, that of that we so The as now one that we're of we listening in expertise one communications to way they

in content to product. forging we've capabilities able great is are and Literally, click begin where built really content on really just This ground you're also that stream content watch seeing make We And to purchase work. commerce. there. decisions. chance to to and new We're the a with

the teams online literally content. area this again a bit -- expertise shop the we is course, And online people And we’ve talked the off social new think will this global their about I for because then, of mobile So, is next an where built phones. that. product shoppable our allows sets shopping, feature we that strategy are within points how teams products do play and a different online channel focused get for development trends price different us patterns. the expand with to footprint to focused on the and team that that's different on

great again, America. we've some all that progress So, progress board, North part in of the the seeing across strong here. made. And Europe, the shown of that's we've we're marrying changes we're in And

experts many lead our to they teams we want so to in we leadership an quite an want thing across opportunity other The And And opportunity areas. strong new give company. lead. them is great at company. with have our are our And to

to organizationally that And made to changes so, we've enable happen.

Operator

line with The questions. Drew with of next proceed Crum your question comes Please from Stifel. the

Drew Crum

the licensing to and and to other Brian, about everyone. relative morning, relative you'd can product you Good Thanks. lineup film Okay. films cadence the prior for TRANSFORMER TRANSFORMER to expect you talk cycles? progress Bumblebee sales had program how

Brian Goldner

Sure.

in far. setting gate, very early First results Bumblebee in We're seeing strong the began on are US just of just quite fans responding the gotten our that the And out first thus to product already all, of positively early shelves days. October. they've albeit

Our consumer only property lineups game have not it the products. has a great because top-level but as toy property major retailers and identified

typical digital offering And markets. New The getting effort in Our a cadence likely and still happen new are later with the later are waiting that And film bit within it our And retail teams we're then at after coming few games game. date they'll reasons, after there many in in a Year. make you out in markets. reasons the is end January elements And will the in New until well. a on WARS other its be you decision China certainly, And date. the for it Backflip which will then China. some supporting mobile is of new Year. -- on the and as it territories But go, film for EARTH is show December it's where, the comes competitive

half home. And home And of in that next expect in half come television year, we will windows So, and first then, the for brand’s impact this also and at for to the pronounced are is with launched the Brands, of new ever around brands, of course, come first all entertainment for Partner our and certainly And TRANSFORMERS entertainment well home next are content and Bumblebee fans. Gap] part than first the new storytelling people will continue in the -- the all entertainment certainly would quarter. as stream the which is these before as more watching movie’s brand more to of the of impact on quarter [Audio year.

robust brand a are quarter. double-digits the TRANSFORMERS the lineup. has a the where strategy, ahead on so, mentioned, we was bit in And as And in up US we the

Drew Crum

Got it.

you format? still the company days, it's that very then going the lend I other area going of or so, The in for Arena, or have early to an portfolio to that PC, identified is any there And forward? game if are free-to-play MAGIC: properties Okay. And know or gears digital-based, themselves a back just IP shifting but investment

Brian Goldner

listen because an of Yes. to investment Arena, who This for continue for want area playing. to are our gamers has MAGIC: remember that we been fans, us the to

games constantly a them just ways that of it's to So, multiple formats. multiple -- constantly investing that we'll play they and to iterating game understand the Think those be the in expanding game. that as so, versus the allow listening in you launch a on iterating service game and for game

esports as but going also MAGIC: forward. see So, game, screen GATHERING certainly for THE growth to on And format. see MAGIC: a to you're of major pillar PC for go begins opportunities as you'll digital it play THE in GATHERING every a

been Pro said, I Tour has the of part first see gaming as in competitive DNA we an our that 'XXs. And As MAGIC's opportunity. since

and other we're playing brands also a we give next an And meeting excited addition, immersive you year. arena. as the analyst represent In few early to about brands, our DUNGEONS updates and DRAGONS early game other in head that certainly further opportunity very we'll And results.

Drew Crum

one Okay. take $XX just is million Great. cash? And to one. then much Deb, million in the you of fourth that last $XX to the how quarter, expect charge

Deborah Thomas

That's all cash.

Drew Crum

all It's cash.

it. Got Okay.

Okay. Thanks, guys.

Operator

with is Susan proceed your questions. Riley Anderson Please of FBR. question line with next B. the from Our

Susan Anderson

my guess on follow-up Thanks morning. I the for of Good Hi. Toys“R”Us. on questions all a taking just question.

slower over that -- time. to you to recapture some going or that market was Just Toys“R”Us smaller sold opportunity just opportunity Toys“R”Us at have to maybe at to Is that from thought think levels would guess than of it rate go at share you you that changed manufacturers out the those is then had as curious, it the same recapturing do to elsewhere? back is same really you that be I don't all? And look a sales expected? at able industry all we that not there Has the distribute XXXX,

Brian Goldner

the about Yes. the year No, that seeing ago. the that entering changes we year, Toys“R”Us recapture the Obviously, year, retailers up I share. from comparable per other believe about a we're that. in fact, half still nothing se Toys“R”Us you're and this through But belief there's big numbers time step still again, as we second year move over And we'll of in our up. against

just our all The to in end. Then we with globally. market, to excess sure changes been inventory that retailers the made have a continued we had of you're was was really to robust. inventory. the the Europe again toys of we demand because And partner over the there for by games we've -- one to UK again, that described. believe has capabilities short-term other industry after to that. them approach But goal disruption, Our product team and and its omni-channel doing to the continue expand you that the retailers channel ensure the in that was online And the has area that our to is the issues. again, some strategy and go behind make worked to And way seeing is bit our we course and grow. What The as wanted are changes plan. time, retailers. has exited year send That's to strategy, weeks also to we're again, organization, new

Susan Anderson

the holiday of the from you're I toys they higher after do allocation to then that change some retailers, holiday And increased a does Great. big level on after seeing dedicated also? guess keeping or of space space plan

Brian Goldner

that think Deb Oh! I earlier. mentioned this

a as channels different in of product will expand our over the US. retail continues to big without specialist time may cadence channel toy of hit I it's but retail strategy note and That think important to retail that with footprint cadence changes change when quarters just of the shelves. the

retailers of see initiatives throughout billion very before, story-led go all And retailers out holiday success being come represented that this them go is forward, rather as $X.X addition get behind episodic support but Our year the become be brands important. to get brands our of a entertainment storytelling or opportunity that that great Gaming Franchise may as year. entertainment-led in year as enable we behind content increasingly excited year tied XX stream to that and toy And recapture not we this share that retailers, about are to goal, television and to story-led forward, our get social in we just with about out motion initiatives we've and consumer to the market dollars Recognize business great increasingly the us throughout the products in be bespoke of insights that second content to at Toys“R”Us business increasingly come in throughout will from retail, partnerships But that having at particular and ensure opportunity brands our That to or those critical. invested and global half have and the share recapture. important, said month this pictures. it for to might Brands year. or said the other the enables become are

Susan Anderson

if last on color level. a about would Where Great. And that then you if Maybe the business? just corporate one think bit about changes one. realigning the more you changes these great? Maybe the made could be could we the were at and how impact talk the you should business provide little just on

Brian Goldner

the over the that last I company. to the the analytics, Sure. across over new the been and and like are these leading last listening, And experts marketing, social data We new company capabilities north years. design our content. last are of across development, on-boarded reinventing storytelling, other constantly six shoppable to way employees Blueprint star date go-to-market insights, the insights. consumer half Recognize increasingly the shopper areas We're we've approach. lot mining always just over that and our been retailer has Brand a of The our insights, changes And view reimagining is decade. decade, new new social

given and current us allows -- that change felt love comprehensive growth to invest make was in in and and we team, cost put a continue in and to positions opportunity beyond. are brands return What yes, and employees step our our there plan our increasingly, they felt to we there want to in deserve. also of desire XXXX But some about to leadership a go capabilities. this both faster. the Hasbro environment, So I in our is that lead, savings. they to organization And an is they're This part being all to

we in changes to leadership for organization. strong female company. to the the to had so, our context commitment made But the diversity the teams strong globally, commitment that's And really we've a a across

Susan Anderson

so helpful. Great. That's luck much. Thanks Good quarter. next

Operator

of with Our Conder question next proceed from line Fargo. is your Please questions. with Wells Tim the

Tim Conder

inventories. bit tariffs. question. all that Thank unknown sales on your this there. wanted sale? on good to control bring or side would any would a potentially trying Looks did Did that deliveries have One inventories the to incremental circle helped you Just little product any or have you own QX were take quick in boosted boosted company back like beat progress any vendors see in you. level I

know So, be impact whatever, that's related question. List future or was And even on implemented. would US? that we But it would one coming we don't to X tariffs, if it to will if assume will XX% then as would much the be be just how largely you, what it business

Deborah Thomas

for we an had Well, from and small actually accounted inventory new markets some that. markets standpoint, that

If you out, our FX the were take down. inventories impact

markets get some However, beat were trying beat to some there. ahead of costs additional some like -- India not but

of the tariffs. some some I'll for do on those we So, -- And the did continue to newer want see comment in we But see not Brian, do future markets we any. US, increases you respect tariffs it. to or with emerging to

the what be look on continue and at potentially We to list could it.

of for adds that that it what The And them markets costs have impacts to now. consumer. and price a We just They've the on biggest of while. that's was have top are had Brazil. tariffs the kind the import

have quality, look of sold subject of product outside it's most we about we continue supply markets. project markets XX% ongoing our important continue and product is tariffs. move continue Right could to at can't as We've to we chain other moving for had to safe the global we're for look to what’s we immediately. be continued a manufacturing So, we of manufactured the while react US. to good a And that to products, in just now. now, our where us We them But product. But at watch. in US,

Brian Goldner

note for US. we're expanded today, it's size to to into our for Tim, it have Deb for we're China sizable in the And and among all And important the US about new in market. the again, manufactured of make the over the looking quite I the for probably in that I next have of that time probably new countries. products or at and first market be think, at said our China this That's will committing our global market the out PLAY-DOH product markets XX% of we'll And fall time closer in here leader year XX%. XX% think And to made two.

Tim Conder

agreement Thank contributed amount very No -- Deb, any helpful. Entertainment new segment? the that and dollar the QX, you. color Okay. the licensing to on

Deborah Thomas

If PONY up really LITTLE movie. you look was executing MY of the increase at the the that increase, made agreement and

what We we've But again every was. shift. won't say that shift, also the recognition I that's a some quarters, amount had specifically had Between year. revenue the

Tim Conder

Okay. Oh! Well, yes.

thought You at And the the said you had but color or on issues not? wanted in get any That's channel China have before. then specific EU, if okay. to globally a cleaned focused just I LatAm you guess little that or inventories in amount And all lastly, more and said on the you'd up. I you why

Brian Goldner

Yes, year issues we've year year our said in Europe. entered much We I'd that that the really really throughout bulk say the too inventory our inventory issues, exited the with last we on the executing of were certain this again, inventory. inventory around much But those the focused inventory for now issues at too conclude end accelerated to with of been plan initiatives are ensuring year. company And had and this we've a issues Europe. we're as

Tim Conder

both. you, Thank Okay.

Operator

The the with questions. Consumer proceed next from question of is line Please Stochel Edge with your Ray Research.

Ray Stochel

Thanks for my Great. taking question.

share you So, adjusting And that your have without to say for Thanks. had? what profitable added more then incremental space And attacking new for competitors whether a with Is of view aggressively can philosophically question liquidations, with ‘XX? long-term severance XQ this or in little sense XXXX. after market would less think any than you Toys“R”Us a growth or one be? maybe guys then as but on being both additional or are you you additional that retailers shelf do

Brian Goldner

development channel But changing strategy. product expanded begins that our with strategy. developed Yes. We've

for the profitable the So, to in again, driving goal growth point right right who prices. to make different at product the different go is price for market retailers

you dollar can store you're So, you with can they to for need price working if product obviously, profitably that retailer, make a that sell, and sell a point.

years And of so, move us for expand to retailers. that's to of those take to a products world couple we're continue around and able And commitment And different taken kinds now, the to a we to develop. them have long-term channels. our

who very fan communicate Sail in directly their and then Barge our MARVEL, with commitment strong comic brands we've have fans both our to fans a And direct-to-the-consumer book focused therefore, as brands, they economy, products have great come and There stores. the focus retailers because fan Hasbro of to their business. through stores. are our to to the on like momentum products have and great of also success on And products We their through we're continue and and out lineup Wars, collector-oriented fans. increasingly HasLab for our several again other there that retailers gamers Star perfect MARVEL and who are brands added done

games And we're I continue -- look to get at behind a around in ranges business and to mentioned growing products to so, of new can that expand unique ways those goods new to our to products those And exclusive to with and and a array of are developing for our audiences. committed brands. channels retail our our can also NERF have again business. retailers earlier sporting games we positioning ensure retailers connection going to they of properties

Operator

Thank you.

with question. your from is Bolton-Weiser line of proceed D.A. Davidson. Linda question next with Our the Please

Linda Bolton-Weiser

Thanks.

the situation completed TRU expecting just the the along chain supply to of volume. longer-term you accordingly? year lost as variety terms actions to actions supply next adjust take you in Do expect you those kind the retailers So, need be to of greater in supplying challenges this lines on basis chain to alluded take of types of a or US in are your of to replace a some you some you year

Brian Goldner

Yes.

we that the quarter us objectives. achieve warehouse we're will that our peak product really mentioned, a quite We of enable needed Recall, needed more more think this period part of third high Midwest in more it’s which to warehouses our probably our doors. We typically, As shipping effectively. our doors adding a doors, level. you help just think if -- And year. and us will is business we manage QX to for that about

We all not full kinds retailers sending we're truckloads. to. of have product more They're differing

the Some cost we there, mileage than XX% that. because we're full than we plan more to By on doing us America. objectives out reducing as look And truckload in of warehouse the by our Midwest them our strategic really believe may in we distribution enable the are where to less that new putting at savings in a markets of centers more our to actually we'll we've And retailers' shipments. warehouses. North work other well have that put go warehouse achieve get continue footprint will impact US. forward, warehouse adopt capabilities global And as an seen we so

Linda Bolton-Weiser

recording It opportunity revenue like Brands. want you're important just next it ask Okay. And when to next into you're much treat it then know I going don't but year, be to Emerging sounds to too about you surprises as about franchise. could can me being RANGERS, year? in we going an that it think substantial go about have that a I POWER and

So, talk for just with that could Would next can the you POWER about we you April in expectations or can what quarter? see you're there in when about year? be the revenue just very first doing revenue? Is RANGERS any talk small that way second

Brian Goldner

Sure.

the we're It like QX some of that is year. Franchise We our quarter. product But a already Franchise in a that revenues on is Coast of really that in our the is sell-off that right. great making. Brand brand sales, is focused West start. a POWER next the for in games then And certainly company. the out working you're the first on ensuring hoping estimation that terms see a Emerging you're There's and putting certain in very to into Licensing And category in we in in feel business. brand the RANGER of Brand we're and that team POWER to begins future. indicated the is Brand place becomes licensing starting good First, product and our come Entertainment toys which period prior RANGERS And

Linda Bolton-Weiser

think just Deb, projected year, the flow the $XXX think had on flow million year? $XXX million as the million And previously then cash for the to million $XXX to of for for for year. guidance I of cash operating you $XXX that we Should

Deborah Thomas

$XXX I say did we Well, to million. think million on $XXX average,

end I see we're we'll right think now, be reduction it that given that we the probably significant as it, to closer don't the are lower of right but range way going now. operations And the maybe range. that below bit to a a

Linda Bolton-Weiser

Thank Okay. you.

Operator

of is line Our Capital with Johnson proceed Markets. the from your next BMO Gerrick question Please question. with

Gerrick Johnson

three to morning. quick. very I but I clarify. they're just Good want have Hi. questions,

So, margins next year, the is it adjusted? is or GAAP comparison

Deborah Thomas

Fair. We at will that highlight Toy

we However, about. our mean talk that they expectation be I would are adjusted margins. that's what typically

Gerrick Johnson

Okay. can they and And they many changes, tell did? exactly what where you us Great. how people, organizational the were,

Brian Goldner

of changes to as were organizational total opportunity the single-digit that represented really to our a more the an nature, earlier, in to The I organization. continue in quickly. the changes percentage global workforce. to evolve global indicated mid So, We change we're evolution, about ensuring step move able saw

change nature all in across business, we're the selling we disciplines as that organization our the where to are the we're incredible product, some have to of leadership I how continue product, We that. changes noted. the reflected And certainly, selling

Gerrick Johnson

that just But Thank be Will you then in And or exactly you. I revenue MAGIC, free-to-play? XXXX? to about bit us to Thank little will it to us perhaps supposed a launch not expected can forecast it tell it And you're Okay. launch? monetized. know is when on you. was targets. be Also, give going how ever

Brian Goldner

Sure.

open Beta Open that effectively So, is to everyone.

more of being in marketing a it's Beta our just the major So, opposed when begin as Open the delineation to on market really earnest. we of is

if go Open played play certainly product the And the you if the being play play So, Twitch product. gamers. available we're not like to Beta. and is can can't from the it's who see you watch simply and can product, very the listening favorable anybody if you’re go responses in product, you'd getting -- on And

on is product big Open for So, we market the Beta just the and the marketing when the pivot marketplace. between the product really begin

the I -- gamers. game. to the to Wizards at In when set free-to-play from going we're cadence. the allow games all these terms we team to feedback our a think taking all go, It's of Obviously, want we're

are play are the can the we free. throughout you place there So, game play. take then that And play for game ways that the game microtransactions that monetize

Gerrick Johnson

you. Perfect. Thank Great.

Operator

At closing you. to for return the Thank back Debbie this time, I'll Hancock remarks. floor

Debbie Hancock

joining replay in available be two The for approximately hours. call Rob. Thank everyone today. on you, Investor will thank And our the website you

you. posted remarks Additionally, will our be this on Investor website management's prepared following Thank call.

Operator

This concludes today's teleconference. you. Thank

your at Thank You for you participation. lines your time. may this disconnect

Hasbro (HAS) 22 Oct 182018 Q3 Earnings call transcript