PAWTUCKET, R.I. — While economists and politicians debate over the potential impact an economic downturn could have on Americans, Chris Cocks said Monday that a large swath of Hasbro’s customer base is being “pinched pretty hard.”
“If I have a concern for the back half of the year, it’s really food inflation continuing unabated,” said Cocks, the CEO of toymaker Hasbro Inc., during the 51st Annual J.P. Morgan Global Technology, Media and Communications Conference in Boston on Monday. “I joke a little bit with our team, but I think it’s serious: our competitor right now is more Unilever and General Mills than it is Mattel or Lego.”
Cocks, who previously served as president and head of Hasbro’s digital gaming division and Wizards of the Coast, was tapped as CEO shortly after its beloved CEO Brian Goldner lost his battle with cancer in late 2021. Since taking over the Pawtucket-based company known for Mr. Potato Head and Monopoly board games, Cocks has had to contend with a glut of inventory and shrinking sales while persistent inflation continues to tighten the budgets of American households.
While executives at major retail giants like Walmart have a cautious view on the economic health of consumers, Cocks said he thinks of Hasbro’s customer base in two categories.
“When you look at the top 20 percent of discretionary-income households, particularly the ‘collector market’... that market is staying very buoyant and very healthy,” said Cocks, who earned $9.4 million in 2022, a 250 percent increase in his compensation compared to 2021.
Hasbro Pulse, the company’s direct-to-consumer business that curates high-end products for the collector market, saw sales increase by 40 percent in the first quarter of this year. Wizards of the Coast business, which Cocks said tends to have a customer base who is “older, savvier, [a] bit higher-income consumer,” saw sales increase by 12 percent. “We think this consumer is continuing to hold up pretty well despite inflationary concerns and macroeconomic headwinds,” he said.
But the general consumer continues to get “pinched pretty hard by inflation,” said Cocks. “Particularly food inflation. And they’re having to make trade offs.”
These consumers are “also losing some COVID support and social programs that the government put in place over the last couple of years,” said Cocks, who described these buyers as “very promotionally sensitive” and “price sensitive” until at least the fourth quarter of this year.
While speaking at the investors conference, Cocks said Hasbro tends to be more oriented toward collectors and higher-income consumers, particularly when it comes to brands like Magic: The Gathering, Dungeons & Dragons, and Hasbro’s other high-end action games.
“But we’ve got to do right by both sides,” said Cocks, who explained the company plans to take “pretty aggressive pricing actions” and getting ahead of its inventory to begin retail promotions in the second half of the year ahead of the holidays.
The comments come about six months after Hasbro executives informed investors of its cost-cutting plan — dubbed Blueprint 2.0 — that would save a projected $250 million to $300 million annually over the next three years. Hasbro’s plan focuses on investing in fewer, but its most identifiable brands. In January, the company cut 15 percent of its workforce after a disappointing holiday shopping season.
Hasbro is also looking to unload its eOne television and film business, which Cocks confirmed Monday is still in progress. Some of the segments’ products include non-Hasbro related television series, such as reality show “Naked & Afraid.” “Right now, we spend about $600 million to $700 million a year in content investments on business like that,” said Cocks.
“I think the biggest pivot between [former CEO] Brian [Goldner] is that he was oriented toward entertainment and I am more oriented toward play,” said Cocks. “Play has been the thing that’s driven brand relationships with consumers... Doesn’t mean entertainment won’t be a part of our story moving forward. I just think it’ll be a right-sized portion of how we think about our cash, and how we think about investing.”
Almost a year and a half after he took over the company, Cocks said he is doubling down on his focus on gaming products and collectibles geared toward older audiences.
“If you look at the five super categories that we’re leaning into, first and foremost, we’re leaning into games,” said Cocks. “That’s a big business for us. Very high growth, very high profitability for us.”
“You go inside any of your homes and I’d be willing to wager that if you have kids, they have a number of Hasbro products inside their houses,” said Cocks. “If you go back and think about your own childhoods, chances are, you started engaging with one of our board games or one of our preschool items at the age of 2 or 3. And you’ve probably continued to engage them.”
Alexa Gagosz can be reached at email@example.com. Follow her on Twitter @alexagagosz and on Instagram @AlexaGagosz.