WIZARDS OF THE COAST AND DIGITAL GAMING SEGMENT SALES SURGE IN Q2

Source https://icv2.com/articles/news/view/48915/wizards-coast-digital-gaming-segment-sales-surge-q2

Sales in Hasbro’s newly created Wizards of the Coast and Digital Gaming segment more than doubled in Q2 2021, behind record sales on two Magic: The Gathering products.  Sales in the segment were $406.3 million in Q2 2021, up 118% over $186.7 million in Q2 2020.  The increase was attributed to two record products, Strixhaven and Modern Horizons 2, released in the quarter, along with growth in digital games including a better-than-expected launch of Magic Arena on mobile.  Dungeons & Dragons also grew, although Dark Alliance, the latest video game release, did not meet expectations, the company said.

Profits in the segment were also robust, up 160% from $74.1 million in Q2 2020 to $192.9 million in Q2 2021.

Hasbro’s total gaming sales, which includes franchise brands Magic: The Gathering and Monopoly along with all of its other game products, were up 63% in the quarter, meaning that the Wizards of the Coast growth rate was faster than the rest of the company’s games.  Monopoly sales were down in comparison to a Covid-fueled Q2 last year.

Overall Hasbro sales were up 54% to $1,322.2 million vs. $860.3 million in Q2 2020 and up 9% vs. pro-forma 2019.  That puts sales of the Wizards of the Coast and Digital Gaming segment at 31% of Hasbro’s total in Q2, up from 22% of sales in Q1 (see “WotC Segment 75% of Hasbro Profits in Q1“).

All of the company’s segments showed operating profits except Entertainment, which took a $109.1 million hit on the sale of eOne’s music division, primarily in a writedown of the value of the asset.  Hasbro showed an overall loss of $22.9 million for the quarter, an improvement over the $33.9 million loss in Q2 2020.

Looking ahead to the second half of the year, the company emphasized that Q2 was expected to be the biggest quarter for the Wizards of the Coast and Digital Gaming segment in 2021, with two Magic: The Gathering releases in Q3 and one in Q4, less than the 2020 pace.  Players returning to game stores is helping to boost backlist sales of Magic, but supply constraints due to manufacturing limitations are a limiting factor.

Input costs and freight costs are up substantially, with ocean freight up by a factor of four vs. a year ago, the company said, but price increases are expected to allow it to maintain margins.

Hasbro confirmed its guidance for overall double-digit revenue growth for the full year.

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