Hasbro (Hasbro (HAS)) shares took a hit Wednesday, dropping more than 8% after the toy and gaming company served up a mixed bag of first-quarter results. The headline numbers were a bit of a seesaw: adjusted earnings of $1.47 per share easily cleared the $1.25 analysts were looking for, but revenue of $1.00 billion came up short of the $1.06 billion consensus. Wall Street, it seems, was hoping for a little more magic.
But dig into the details, and there's plenty of sparkle. The real star of the show was the Wizards & Digital Gaming segment, which posted a 26% revenue jump year-over-year. That's the division that houses Magic: The Gathering, and it's been on an absolute tear. CEO Chris Cocks was quick to point out that this wasn't a one-hit wonder. "Q1 showed that Magic's record 2025 was no fluke," he said. The latest premier set, Lorwyn Eclipsed, became the best-selling in the franchise's history, and collaborations with Teenage Mutant Ninja Turtles, Marvel, The Hobbit, and Star Trek are pulling in new players. Even MagicCon Las Vegas set a record as the biggest Magic event ever, proving demand is strong across live events, tabletop, and digital.
On the profitability front, things looked solid. Adjusted operating profit climbed to $287 million from $222.4 million a year ago, and the adjusted operating margin expanded to 28.7% from 25.1%. Hasbro ended the quarter with $857.1 million in cash and $280.5 million in inventories. The company also returned $106 million to shareholders through dividends and buybacks, and put another $96 million toward debt reduction, including issuing $400 million in new notes to refinance higher-cost debt.
The consumer products business, which includes the classic toys and games, was flat for the quarter. But Cocks sees brighter days ahead, citing stronger point-of-sale trends, lean retailer inventories, and market share gains. Upcoming releases tied to Star Wars, Toy Story 5, Marvel Studios' Doomsday, Play-Doh innovation, FIFA Monopoly, and KPop Demon Hunters are all in the pipeline.
Not everything was rosy. Entertainment revenue dropped 24%, partially offsetting the gains elsewhere. And then there's the cybersecurity incident. Hasbro said a breach identified in late March is expected to delay about $40 million to $60 million in consumer products revenue from the second quarter into the back half of 2026. The company also expects to incur roughly $20 million in remediation-related operating expenses. That's a short-term headache, but not a game-changer.
On the macro front, Hasbro is bracing for some headwinds. During the conference call, an executive noted that rising oil prices—assuming they stay around $100 per barrel—could cost the company about $30 million annually. On the flip side, Hasbro has a tariff refund claim worth approximately $50 million.
For the full year, Hasbro stuck to its guns, reaffirming revenue guidance of $4.84 billion to $4.94 billion (analysts were looking for $4.95 billion), adjusted operating margin of 24% to 25%, and adjusted EBITDA of $1.40 billion to $1.45 billion. The company plans to keep investing in its core business, returning capital to shareholders, and chipping away at debt.
So why the stock drop? The revenue miss and the cybersecurity delay likely spooked investors, even if the long-term story remains intact. Magic's momentum is real, and the consumer products pipeline looks promising. But in the short term, Wall Street wants to see the numbers add up. Hasbro shares closed at $89.19, down 8.22% on the day.
