Hasbro Takes a “Wait and See” Approach to Tariffs
Toymaker Hasbro crushed expectations in its latest quarter, but its annual guidance hasn’t been updated to consider potential tariffs.
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Hasbro’s stock surged by double-digits yesterday after the Monopoly board game maker shared an estimate-crushing 17% revenue jump for the first quarter and a 69% hike in profit. After revenue fell 15% in the holiday quarter, Hasbro debuted a profits-focused “Play to Win” strategy it says is starting to pay off.
But it might not be fun and games for long: Hasbro hasn’t updated the annual forecast it gave last month to factor in new tariffs. The company sources half of its toys and games from China, where the Trump administration recently slapped a 145% tariff on goods.
The Dolls are Balding
Without Chinese manufacturing, the CEO of MGA Entertainment (Bratz, L.O.L. Surprise!) doesn’t know how the company will keep putting hair on its dolls’ heads:
- Chinese factories churned out 75% of all the toys and games sold in the US last year, according to the US Commerce Department. The Toy Association said it would take years to move the supply chain to the US, but some tricks of the trade won’t be so easily transferred.
- While the US can take on highly automated manufacturing, toy-making still taps skilled hand-labor, like painting doll faces, that China specializes in. MGA Entertainment’s CEO said there’s no American factory that can make doll hair: “What am I supposed to do? Sell bald dolls?”
As toymakers struggle to find skilled labor in the states, Hasbro predicted the price of some toys could rise 50%. Barbie-maker Mattel, which like Hasbro hasn’t yet updated its guidance to reflect new tariffs, has also warned of potential price increases.
The Tariff that Stole Christmas: Spring is a critical time for the toy industry, because it’s when production starts to ramp up ahead of holiday shopping. Companies that keep Chinese factories humming like normal in hopes that tariffs will be just a bad dream could be hit with a harsh reality when it’s time to ship. Unwilling to take that risk, Basic Fun!, which told CNN all of its toys (including Care Bears and Tonka Trucks) are made in China, paused all production. Its CEO said tariffs don’t just threaten the price and availability of toys, but the industry’s very survival.
