Hasbro revealed that its sales on Magic: The Gathering (which include both physical products and digital revenues) were up 30% in Q1, contributing to a 2% overall growth rate in the period. Other Hasbro brands growing at that rate were My Little Pony and Play-Doh. Hasbro’s Marvel lines were up over 20%. The Magic increases are the continuation of a multi-year trend that has made Magic the largest game brand in the U.S. (see "'Magic' the Largest Game Brand").
Earnings after adjustments were up 30%, but the adjustments were significant, primarily for costs related to the cost-cutting plan Hasbro started after its bad finish to 2012 (see "Hasbro to Cut 10% of Workforce"). So the improved sales and adjusted earnings in Q1 were a turnaround, and give Hasbro some breathing room as it works on cutting costs as its sales go up.
Game sales were up26%, Girls sales were up 23%, Pre-school up 8%, and Boys down 20%, due to tough comparisons for Star Wars (The Phantom Menace 3D release in 2012 boosted demand for Star Wars toys) and Beyblade. Increases in Marvel, G.I. Joe, and Nerf were not enough to offset the declines in Star Wars and Beyblade.
Hasbro is planning a big year for Marvel in 2013, with Iron Man products hitting the market around Easter; Wolverine on sale this summer; Thor: The Dark World shipping this fall, and a new Ultimate Spider-Man line tied to the animated series.
The Marvel lines come with a hefty cost. Hasbro CFO Deborah Thomas revealed in the conference call that Marvel was due a $30 million royalty advance in May and a $50 million payment in July.