HASBRO, INC. (HAS)
SIC breadcrumb: Manufacturing > SIC Major Group 39 > SIC 3944 Games, Toys & Children's Vehicles (No Dolls & Bicycles)
SEC company page: https://www.sec.gov/edgar/browse/?CIK=46080. Latest filing source: 0000046080-26-000011.
Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
|---|---|---|---|---|
| Revenue | 5,365,900,000 | USD | 2025 | 2026-02-25 |
| Net income | -322,400,000 | USD | 2025 | 2026-02-25 |
| Assets | 5,552,000,000 | USD | 2025 | 2026-02-25 |
Financials
Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-25. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000046080.json. Derived margins are computed from the extracted annual SEC facts.
| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 5,019,822,000 | 5,209,782,000 | 4,579,646,000 | 4,720,200,000 | 5,465,400,000 | 6,420,400,000 | 6,666,500,000 | 5,710,600,000 | 4,745,900,000 | 5,365,900,000 |
| Net income | 551,380,000 | 396,607,000 | 220,434,000 | 520,500,000 | 222,500,000 | 428,700,000 | 203,500,000 | -1,489,300,000 | 385,600,000 | -322,400,000 |
| Operating income | 788,048,000 | 810,359,000 | 331,052,000 | 652,100,000 | 501,800,000 | 763,300,000 | 407,700,000 | -1,538,800,000 | 690,000,000 | 11,100,000 |
| Diluted EPS | 4.34 | 3.12 | 1.74 | 4.05 | 1.62 | 3.10 | 1.46 | -10.73 | 2.75 | -2.30 |
| Assets | 5,091,366,000 | 5,289,983,000 | 5,262,988,000 | 8,855,600,000 | 10,818,400,000 | 10,037,800,000 | 9,295,900,000 | 6,540,900,000 | 6,340,300,000 | 5,552,000,000 |
| Liabilities | 3,205,926,000 | 3,460,026,000 | 3,508,502,000 | 5,860,098,000 | 7,857,300,000 | 6,950,800,000 | 6,434,000,000 | 5,453,900,000 | 5,155,300,000 | 4,986,500,000 |
| Stockholders' equity | 1,754,600,000 | 2,995,700,000 | 2,936,700,000 | 3,063,100,000 | 2,861,900,000 | 1,087,000,000 | 1,185,000,000 | 565,500,000 | ||
| Net margin | 10.98% | 7.61% | 4.81% | 11.03% | 4.07% | 6.68% | 3.05% | -26.08% | 8.12% | -6.01% |
| Operating margin | 15.70% | 15.55% | 7.23% | 13.82% | 9.18% | 11.89% | 6.12% | -26.95% | 14.54% | 0.21% |
Financial Charts
Macro Cross-References
- CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- UNRATE - Unemployment Rate
- FEDFUNDS - Federal Funds Effective Rate
- CES0500000003 - Average Hourly Earnings of All Employees, Total Private
- DFEDTARU - Federal Funds Target Range - Upper Limit
- DFEDTARL - Federal Funds Target Range - Lower Limit
- DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
- CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
- CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
- PCEPI - Personal Consumption Expenditures: Chain-type Price Index
- PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- PPIACO - Producer Price Index by Commodity: All Commodities
- T10YIE - 10-Year Breakeven Inflation Rate
- U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- PAYEMS - All Employees, Total Nonfarm
- CIVPART - Labor Force Participation Rate
- EMRATIO - Employment-Population Ratio
- UNEMPLOY - Unemployed
- CE16OV - Employment Level
- ICSA - Initial Claims
- JTSJOL - Job Openings: Total Nonfarm
- JTSQUR - Quits: Total Nonfarm
- GDPC1 - Real Gross Domestic Product
- A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
- INDPRO - Industrial Production: Total Index
- TCU - Capacity Utilization: Total Index
- HOUST - New Privately-Owned Housing Units Started: Total Units
- PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- RSAFS - Advance Retail Sales: Retail Trade
- PCE - Personal Consumption Expenditures
- DSPIC96 - Real Disposable Personal Income
- PSAVERT - Personal Saving Rate
- M2SL - M2
- BOPGSTB - U.S. International Trade in Goods and Services: Balance
Latest 10-K MD&A
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
OBJECTIVE
Our objective within the following discussion is to provide an analysis of the Company’s Financial Condition, Cash Flows and Results of Operations from management's perspective, which should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto, included in Part II, Item 8. Financial Statements, of this Annual Report on Form 10-K.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements concerning the Company’s expectations and beliefs. Refer to “Statement Regarding Forward-Looking Statements” and Part I, Item 1A. Risk Factors, of this Form 10-K for a discussion of other uncertainties, risks and assumptions associated with these statements.
The following includes a comparison of our consolidated results of operations for fiscal years 2025 and 2024. For a comparison of our consolidated results of operations for fiscal years 2024 and 2023, refer to Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, of our Annual Report on Form 10-K for the fiscal year ended December 29, 2024, filed with the SEC on February 27, 2025. Unless otherwise specifically indicated, all dollar or share amounts herein are expressed in millions of dollars or shares, except for per share amounts.
The fiscal years ended December 28, 2025 and December 29, 2024 were both fifty-two week periods.
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EXECUTIVE SUMMARY
Hasbro Inc. ("Hasbro") is a leading games, intellectual property ("IP"), and toy company whose mission is to create joy and community through the magic of play. With over 100 years of expertise, we deliver play experiences to kids, families, and fans around the world, through physical and digital games, video games, toys, licensed consumer products, location-based entertainment, film, TV and more.
We generate revenue and earn cash by developing, marketing, licensing and selling products, play and entertainment experiences, based on our global brands as well as other IP in a broad variety of categories. This includes: innovative toy and gaming brands and role-playing and fantasy card collecting games; the marketing and sale of toys and games, including our owned and partner brands, through retail stores, ecommerce platforms and Hasbro PULSE, our direct-to-consumer platform; the distribution, license and sale of digital games developed both internally and through licensing out our IP to third parties, such as Baldur's Gate 3, Monopoly Go! and Magic: The Gathering Arena and other digital games; and entertainment content. Additionally, the Company generates revenue through licensing our brands to third parties for toys and games, consumer products, such as apparel and publishing, as well as for use in theme park attractions and other forms of location-based entertainment and within formats such as film and TV programming.
Recent Developments
Tariffs
Significant changes in trade policy announced by the U.S. government could adversely impact our forward-looking financial results. The Company monitors the impacts of tariffs to its business operations on an ongoing basis and may need to implement actions such as price adjustments or making changes in our supply chain sourcing strategies in order to mitigate the impact of tariffs in future periods. The impacts of tariffs may lead to reduced economic activity, increased costs, reduced demand and changes in purchasing behaviors for some or all of our products, actual or potential impairments, write-downs or unrealizability of some of our existing assets, or other economic outcomes that could have a material adverse impact on our sales volumes, prices, and our financial results.
As a result of the estimated impact of tariffs and other macroeconomic headwinds on the Company's forward-looking forecasts, in the second quarter of 2025, the Company assessed its goodwill for potential impairment, resulting in the recognition of a non-cash goodwill impairment of $1,021.9 million in the Consumer Products segment. Refer to Note 8, Goodwill and Intangible Assets, in our notes to consolidated financial statements for further details related to goodwill.
The Company recognized approximately $44.9 million of tariff costs within Cost of sales during 2025. While the final impacts of tariffs remain uncertain, the Company continues to execute decisively against the evolving tariff backdrop.
On February 20, 2026, the U.S. Supreme Court issued a ruling against the International Emergency Economic Powers Act ("IEEPA") Tariffs that we have been paying to the U.S. government since the enactment on April 2, 2025. This could impact our results in 2026 and we are currently evaluating the accounting impacts including our ability to apply for a refund on tariffs previously paid.
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Summary of Financial Performance
Results of Operations — Consolidated
The following table presents the consolidated results of operations for 2025 and 2024:
2025
2024
Amount
% Net Revenues
Amount
% Net Revenues
Net revenues
$
4,701.3
100.0
%
$
4,135.5
100.0
%
Costs and expenses
Cost of sales
1,296.2
27.6
%
1,179.5
28.5
%
Program cost amortization
35.8
0.8
%
49.3
1.2
%
Royalties
368.9
7.8
%
284.2
6.9
%
Product development
385.6
8.2
%
294.1
7.1
%
Advertising
316.9
6.7
%
319.5
7.7
%
Amortization of intangible assets
66.0
1.4
%
68.3
1.7
%
Impairment of goodwill
1,021.9
21.7
%
—
—
%
Loss on disposal of business
25.0
0.5
%
37.4
0.9
%
Selling, distribution and administration
1,173.9
25.0
%
1,213.2
29.3
%
Total costs and expenses
4,690.2
99.8
%
3,445.5
83.3
%
Operating profit
11.1
0.2
%
690.0
16.7
%
Non-operating expense
Interest expense
163.4
3.5
%
171.2
4.1
%
Interest income
(28.6)
(0.6)
%
(47.3)
(1.1)
%
Other (income) expense, net
(21.7)
(0.5)
%
69.1
1.7
%
Total non-operating expense, net
113.1
2.4
%
193.0
4.7
%
(Loss) earnings before income taxes
(102.0)
(2.2)
%
497.0
12.0
%
Income tax expense
216.2
4.6
%
102.6
2.5
%
Net (loss) earnings
(318.2)
(6.8)
%
394.4
9.5
%
Net earnings attributable to noncontrolling interests
4.2
0.1
%
8.8
0.2
%
Net (loss) earnings attributable to Hasbro, Inc.
$
(322.4)
(6.9)
%
$
385.6
9.3
%
Net (loss) earnings per common share:
Basic
$
(2.30)
$
2.77
Diluted
$
(2.30)
$
2.75
Net Revenues
Consolidated net revenues for the year ended December 28, 2025 increased 13.7% to $4,701.3 million from $4,135.5 million for the year ended December 29, 2024, primarily driven by growth of $675.6 million, or 44.7%, in the Wizards of the Coast and Digital Gaming segment. This growth was offset by a $106.3 million, or 4.2%, decrease in the Consumer Products segment, as well as a $3.5 million, or 4.4%, decrease in the Entertainment segment. Refer to the Segment Results discussion below for further details.
The following table presents net revenues expressed by brand portfolio category for 2025 and 2024:
2025
2024
% Change
Grow Brands
$
3,479.1
$
2,797.1
24.4
%
Optimize Brands
698.2
731.5
(4.6)
%
Reinvent Brands
524.0
606.9
(13.7)
%
Net Revenues
$
4,701.3
$
4,135.5
13.7
%
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Grow Brands: Our Grow Brands represent the highest margin, highest growth opportunities in categories where we see significant share and/or underlying market growth, such as MAGIC: THE GATHERING, Hasbro Gaming, PLAY-DOH, Marvel, including SPIDER-MAN and THE AVENGERS, and DUNGEONS & DRAGONS. The Grow Brands portfolio net revenues increased 24.4% in 2025 as compared to 2024. The net revenue increase primarily reflects higher net revenues from MAGIC: THE GATHERING, which had a record year, increasing $641.5 million from 2024 behind Universes Beyond sets such as Final Fantasy, Avatar: The Last Airbender, Marvel's Spider-Man, and Edges of Eternities. Growth in MAGIC: THE GATHERING was accompanied by an increase in MONOPOLY, both in the traditional games space, as well as from increased contributions from our digital licensing arrangement with Scopely, Inc. for MONOPOLY GO!, which contributed $168.0 million of revenue in 2025 compared to $112.2 million of revenue in 2024. The net revenue increase was partially offset by revenue declines from PLAY-DOH and DUNGEONS & DRAGONS.
Optimize Brands: Optimize Brands represent opportunities to maintain or grow share while improving operating profit returns, including brands such as TRANSFORMERS, PEPPA PIG, and Lucasfilms' STAR WARS. The Optimize Brands portfolio net revenues decreased 4.6% in 2025 as compared to 2024. During 2025, Optimize Brands net revenue decreases were driven by lower net revenues from the Company's products for STAR WARS, impacted by a reduced slate of entertainment releases, along with declines from PEPPA PIG and BABY ALIVE. The net revenue decrease was partially offset by continued growth in TRANSFORMERS and DUEL MASTERS.
Reinvent Brands: Reinvent Brands represent opportunities to reinvent or restructure to drive innovation and improve operating profit returns and include those brands such as NERF, BEYBLADE, PJ MASKS, POWER RANGERS, and FURBY. The Reinvent Brands net revenues decreased 13.7% in 2025 as compared to 2024 primarily driven by lower net revenues from NERF, which were partially offset by revenue contributions from BEYBLADE. In addition, Reinvent Brands net revenues were also negatively impacted by the lapping of prior year's licensing revenues for MY LITTLE PONY trading cards, which directly resulted in a decrease of $40.5 million, or 47.0%, year-over-year.
OPERATING COSTS AND EXPENSES
Cost of Sales: Cost of sales primarily consists of purchased materials, labor, manufacturing overhead and other inventory-related costs such as obsolescence. Cost of sales increased 9.9% to $1,296.2 million, or 27.6% of net revenues, for 2025 compared to $1,179.5 million, or 28.5% of net revenues, for 2024. The Cost of sales increase in dollars was driven primarily by sales volumes and a $26.7 million benefit recorded during 2024 related to a historical over-accrual of vendor commitment liabilities as discussed in Note 1, Summary of Significant Accounting Policies, in our notes to consolidated financial statements. Additionally, Cost of sales for 2025 includes $44.9 million of tariff costs. These factors were offset by supply chain productivity and cost savings initiatives.
Program Cost Amortization: Program cost amortization totaled $35.8 million, or 0.8% of net revenues in 2025, compared to $49.3 million, or 1.2% of net revenues in 2024. The majority of the Company's program costs are capitalized as incurred and amortized using the individual-film-forecast method. Program cost amortization reflects both the phasing of revenues associated with films and television programming, as well as the type of content being produced and distributed. The decrease in dollars and as a percent of net revenues during 2025 was driven by reduced content spend.
Royalties: Royalties totaled $368.9 million, or 7.8% of net revenues, in 2025 compared to $284.2 million, or 6.9% of net revenues, in 2024. Fluctuations in royalty expense generally relate to the volume of entertainment-driven products sold in a given period, especially if the Company is selling product tied to one or more major motion picture releases in the period, as well as product mix for our toy, game, and trading card products that utilize partner IP. The increase in Royalties in dollars and as a percent of net revenues during 2025 directly reflects the impact of increased sales relating to MAGIC: THE GATHERING Universes Beyond sets, such as Final Fantasy, Avatar: The Last Airbender and Marvel's Spider-Man, for which the Company is obligated to pay a royalty.
Product Development: Product development expense in 2025 totaled $385.6 million, or 8.2% of net revenues, compared to $294.1 million, or 7.1% of net revenues, in 2024. Product development expenditures reflect the Company’s investment in innovation and anticipated growth across our brand portfolio. The increase in Product development expense during 2025 was driven by incremental investments in the development of digital game titles that have not yet met technological feasibility.
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Advertising: Advertising expense in 2025 totaled $316.9 million, or 6.7% of net revenues, compared to $319.5 million or 7.7% of net revenues in 2024. The level of the Company’s advertising expense is generally impacted by revenue mix, as well as the amount and type of theatrical releases and television programming delivered. The Advertising expense decrease during 2025 was primarily driven by the Consumer Products segment, which decreased $30.3 million, as the Company sought measures to reduce variable expenses to offset the operating profit impact of tariffs. The reduction in Consumer Products spend was offset by additional spend necessary to support top line growth opportunities within the Grow Brands category, specifically an increase of $28.8 million within the Wizards of the Coast and Digital Gaming segment.
Amortization of Intangible Assets: Amortization of intangible assets remained relatively flat at $66.0 million, or 1.4% of net revenues, in 2025 compared to $68.3 million, or 1.7% of net revenues, in 2024. The amortization expense was driven by the straight-line amortization of the Company's remaining definite-lived intangible assets.
Impairment of Goodwill: During 2025, the Company recorded a $1,021.9 million non-cash goodwill impairment charge associated with goodwill assigned to reporting units within the Company's Consumer Products segment. There were no goodwill impairment charges during 2024. Refer to Note 8, Goodwill and Intangible Assets, in our notes to consolidated financial statements for further details.
Loss on Disposal of Business: Loss on disposal of business decreased to $25.0 million, or 0.5% of net revenues, in 2025 compared to $37.4 million, or 0.9% of net revenues, in 2024. The Loss on disposal of business for both periods represents the loss recognized associated with the divestiture of the Company's non-core film and TV business (the "eOne Film and TV business") within the Entertainment segment. Refer to Note 3, Sale of Entertainment One Film and TV Business, in our notes to consolidated financial statements for additional information on the sale of the eOne Film and TV business.
Selling, Distribution and Administration Expenses: Selling, distribution and administration expenses decreased to $1,173.9 million, or 25.0% of net revenues in 2025, from $1,213.2 million, or 29.3% of net revenues, in 2024. The decrease in Selling, distribution and administration expenses during 2025 compared to 2024 primarily reflects lower administrative expenses due to cost savings initiatives, along with a non-recurring $31.1 million expense related to historical environmental exposures recorded during 2024, partially offset by a non-recurring stock-compensation adjustment of $18.1 million recorded during 2024, as discussed in Note 1, Summary of Significant Accounting Policies, in our notes to consolidated financial statements.
NON-OPERATING EXPENSE
Interest Expense: Interest expense totaled $163.4 million in 2025 compared to $171.2 million in 2024. The decrease in Interest expense in 2025 primarily reflects lower average outstanding borrowings in 2025 as compared to 2024. These decreases were partially offset by a higher average interest rate on the outstanding borrowings.
Interest Income: Interest income was $28.6 million in 2025 compared to $47.3 million in 2024. Lower Interest income in 2025 primarily reflects earnings on the Company's investments in U.S. Treasury bills, which were substantially higher in 2024 when compared to 2025.
Other (income) expense, Net: Other income, net was $21.7 million in 2025 compared to other expense of $69.1 million in 2024. Other (income) expense, net in 2024 was impacted by an impairment loss of $78.2 million related to our joint venture investment in the Discovery Family Channel as discussed in Note 9, Equity Method Investment, in our notes to consolidated financial statements. The remainder of the change in Other (income) expense, net was primarily driven by foreign currency exchange gains and losses experienced during 2025 as compared to those experienced during 2024.
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Table of Contents
INCOME TAXES
Income tax expense totaled $216.2 million on pre-tax loss of $102.0 million during 2025 compared to income tax expense of $102.6 million on pre-tax income of $497.0 million during 2024. Both periods were impacted by discrete tax events. During 2025, the Company recorded a non-cash goodwill impairment within the Consumer Products segment of $1,021.9 million with an associated tax benefit of $5.4 million and an unfavorable adjustment to Loss on disposal of the eOne Film and TV business of $25.0 million with no associated tax benefit. For 2024, the Company had a $37.4 million unfavorable adjustment to Loss on disposal of the eOne Film and TV business with no associated tax benefit.
The effective tax rates for 2025 and 2024 were (212.1)% and 20.7%, respectively. The change in the effective rate from 2024 to 2025 is primarily driven by the non-cash impairment of goodwill with no material tax benefit.
Exclusive of the impairment of goodwill and the unfavorable adjustment to the Loss on disposal of the eOne Film and TV business, the Company recorded a net discrete tax expense of $2.3 million compared to a net discrete tax benefit of $13.1 million during 2024. The net discrete tax expense recorded in 2025 is primarily associated with net valuation allowances recorded during the year. The net discrete tax benefit recorded in 2024 is primarily associated with a benefit from the release of uncertain tax positions for certain statute of limitation expirations, and favorable return to provision adjustments.
We previously considered the earnings in our non-U.S. subsidiaries to be indefinitely reinvested and, accordingly, recorded no deferred income taxes. The Company still has significant cash needs outside the United States and continues to consistently monitor and analyze its global working capital and cash requirements. However, we intend to repatriate substantially all of our accumulated foreign earnings when appropriate. As of December 28, 2025, we have recorded $5.3 million of foreign withholding and U.S. state income tax liability. The Company will continue to record additional tax effects, if any, in the period that the ongoing distribution analysis is completed and is able to make reasonable estimates.
We are subject to income and other taxes in the U.S. (federal and state) and foreign jurisdictions. Changes to these laws or regulations may impact our tax liabilities. On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law with certain provisions effective in 2025 and other provisions becoming effective in 2026. The OBBBA provisions include the restoration of full expensing for domestic research and development expenses, reinstatement of accelerated depreciation on qualified capital expenditures, and modifications to the international tax framework, among other items. The OBBBA also provides for an election to accelerate the deduction of the remaining unamortized domestic research and development expenses capitalized previously. For fiscal year 2025, the primary impact of the OBBBA to the Company was the accelerated expensing of domestic research and development costs which decreased our income eligible for foreign-derived intangible income ("FDII"), reduced our deferred tax assets, and reduced our current income tax liability. Other OBBBA changes did not have a material impact on the Company's consolidated financial statements in the current year, we are assessing the impact of OBBBA on the consolidated financial statements for future periods.
As a global company, we review changes in all global tax laws. In 2025 and 2024 no changes, other than those discussed above, materially impacted our Consolidated Financial Statements.
SEGMENT RESULTS
The summary that follows provides a discussion of the results of operations of our segments: Wizards of the Coast & Digital Gaming, Consumer Products and Entertainment. Corporate and Other, which does not meet the criteria to be an operating segment, provides management and administrative services to the Company's principal reporting segments and consists of unallocated corporate expenses and administrative costs and activities not considered when evaluating segment performance as well as certain assets benefiting more than one segment.
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The following table presents net external revenues and operating profit (loss) for the Company's reportable segments for 2025 and 2024:
2025
2024
% Change
Net revenues:
Wizards of the Coast and Digital Gaming
$
2,186.9
$
1,511.3
44.7
%
Consumer Products
2,437.6
2,543.9
(4.2)
%
Entertainment
76.8
80.3
(4.4)
%
Total net revenues
$
4,701.3
$
4,135.5
13.7
%
Operating profit (loss):
Wizards of the Coast and Digital Gaming
$
1,006.8
$
632.0
59.3
%
Consumer Products(1)
(942.6)
115.3
NM
Entertainment(1)
0.4
(1.6)
NM
Corporate and Other
(53.5)
(55.7)
3.9
%
Total operating profit
$
11.1
$
690.0
(98.4)
%
(1) % Change is not meaningful ("NM") for these segments.
Wizards of the Coast and Digital Gaming Segment
The following table presents Wizards of the Coast and Digital Gaming segment net revenues by category for 2025 and 2024:
2025
2024
% Change
Tabletop Gaming
$
1,686.6
$
1,039.6
62.2
%
Digital and Licensed Gaming
500.3
471.7
6.1
%
Net Revenues
$
2,186.9
$
1,511.3
44.7
%
Wizards of the Coast and Digital Gaming segment net revenues increased 44.7% in 2025 compared to 2024. Tabletop Gaming revenue increased 62.2% behind growth of $638.2 million in MAGIC: THE GATHERING, primarily due to strong demand for Universes Beyond sets such as Final Fantasy, Marvel's Spider-Man, and Avatar: The Last Airbender as well as various backlist titles. Digital and Licensed Gaming increased 6.1% due to strong results for MONOPOLY GO!, which contributed $168.0 million of revenue in 2025 compared to $112.2 million of revenue in 2024.
Wizards of the Coast and Digital Gaming segment operating profit increased $374.8 million to $1,006.8 million in 2025, compared to $632.0 million in 2024. The increase in operating profit in dollars is directly attributable to the revenue growth as discussed above. Segment operating profit margin increased to 46.0% in 2025 from 41.8% in 2024, primarily driven by increased net revenue and product mix in 2025 as compared to 2024.
Consumer Products Segment
The following table presents the Consumer Products segment net revenues by major geographic region for 2025 and 2024:
2025
2024
% Change
North America
$
1,421.7
$
1,493.0
(4.8)
%
Europe
566.0
519.7
8.9
%
Asia Pacific
249.4
286.7
(13.0)
%
Latin America
200.5
244.5
(18.0)
%
Net Revenues
$
2,437.6
$
2,543.9
(4.2)
%
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Consumer Products segment net revenues decreased 4.2% in 2025 compared to 2024 primarily driven by reduced sales volumes, which was impacted by broader industry trends and tariff-related impacts to North America, partially offset by strong performance in Europe. While the Company had growth in brands such as BEYBLADE, MARVEL, MONOPOLY, and TRANSFORMERS, the growth was more than offset by lower net revenue for brands such as NERF, MY LITTLE PONY, and PLAY-DOH. The decline associated with MY LITTLE PONY was attributed to the lapping of 2024 licensing revenue related to MY LITTLE PONY trading cards, which resulted in a decrease of $40.5 million, or 47.0%, year-over-year.
Consumer Products segment operating results decreased $1,057.9 million to an operating loss of $942.6 million in 2025, compared to operating profit of $115.3 million in 2024. Operating profit margin decreased to (38.7)% of net revenues in 2025 from an operating margin of 4.5% of net revenues in 2024. The decrease in operating profit in 2025 in both dollars and percent was driven by the declines in revenue, discussed above, a non-cash goodwill impairment charge of $1,021.9 million recorded in 2025, and approximately $44.9 million of tariff costs recognized in Cost of sales. The declines were partially offset by savings realized from the Company's cost savings and transformation initiatives. Refer to Note 8, Goodwill and Intangible Assets, in our notes to consolidated financial statements for further details related to goodwill.
Entertainment Segment
The following table presents Entertainment segment net revenues by category for 2025 and 2024:
2025
2024
% Change
Family Brands
$
66.7
$
73.7
(9.5)
%
Film and TV
10.1
6.6
53.0
%
Net Revenues
$
76.8
$
80.3
(4.4)
%
Entertainment segment net revenues decreased 4.4% in 2025 compared to 2024, primarily driven by the timing of entertainment streaming renewals.
Entertainment segment operating profit increased to $0.4 million, compared to an operating loss of $1.6 million in 2024. The increase in Entertainment segment operating results was driven by a decrease of $12.4 million in Loss on disposal of business related to the sale of the eOne Film and TV business in 2025 as compared to 2024. Refer to Note 3, Sale of Entertainment One Film and TV Business, to the notes to consolidated financial statements for further details. The favorability was offset by lower segment net revenues due the timing of entertainment streaming renewals and a decrease of $16.2 million in royalty income allocated to the Entertainment segment driven by the decrease in sales volumes within the Consumer Products segment, partially offset by $13.5 million of lower program cost amortization.
Corporate and Other
In Corporate and Other, the operating losses were $53.5 million in 2025 compared to operating losses of $55.7 million in 2024. Operating losses in 2025 were lower than 2024, primarily due to net realized cost savings initiatives more than offsetting three prior period non-recurring adjustments recorded during 2024 that provided a combined income statement benefit of approximately $13.7 million. Refer to Note 1, Summary of Significant Accounting Policies, to the notes to consolidated financial statements for further details on the non-recurring adjustments.
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Critical Accounting Policies and Significant Estimates
The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. As such, management is required to make certain estimates, judgments and assumptions that it believes are reasonable based on information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses for the periods presented. The critical accounting policies which management believes are the most critical to aid in fully understanding and evaluating the Company’s reported financial results include the recoverability of goodwill and intangible assets and income taxes.
Recoverability of Goodwill and Intangible Assets
Goodwill and other intangible assets include the cost of the acquired business in excess of the fair value of the tangible net assets recorded in connection with each acquisition. We assess goodwill and other intangible assets with indefinite lives for impairment each year, or more frequently if events or changes in circumstances indicate an asset may be impaired. For goodwill and indefinite-lived intangible assets, our policy is to assess for impairment as of the beginning of each fiscal fourth quarter. The Company may perform a qualitative assessment and bypass the quantitative impairment testing process, if it is not more likely than not that the carrying value of a reporting unit exceeds its fair value. For other intangible assets with definite lives, we assess for impairment only if events occur that indicate that the carrying amount of an asset may not be recoverable.
The quantitative test of goodwill for impairment requires us to estimate the fair value of our reporting units. We test goodwill at the reporting unit level, which we define as one level below the operating segment. Our reporting units are aligned with our product lines that are separately managed and reviewed. As a result of the estimated impact of tariffs and other macroeconomic headwinds on the Company's forward-looking forecasts, in the second quarter of 2025, we performed a quantitative impairment test for certain of our reporting units within the Consumer Products and Entertainment segments. The reporting units within the Consumer Products segment subject to the quantitative test included North America, Europe, Asia Pacific, and Latin America, as well as the Family Brands reporting unit within the Entertainment segment. We have concluded that the North America, Europe, Asia Pacific, and Latin America reporting units have similar economic characteristics and should be aggregated for purposes of testing goodwill for impairment. Our conclusion was based on a detailed analysis of the aggregation criteria set forth in the Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") Topic 280, Segment Reporting, and in FASB ASC Topic 350, Intangibles - Goodwill and Other. These reporting units serve similar clients and have similar products, including similar sourcing and distribution methods and they have similar economic characteristics.
We determined that the carrying values of our regional Consumer Products reporting units, when aggregated during the second quarter of 2025 based upon similar economic characteristics, exceeded their respective fair values and recorded aggregate pre-tax non-cash impairment charges of $1,021.9 million. Specifically, the fair values of North America and Europe reporting units were determined considering a discounted cash flow model which is primarily based on management’s future revenue and cost estimates, which included the estimated impact of tariff policies in effect and the related macroeconomic environment, and discount rate. The fair values of the Asia Pacific and Latin America reporting units were determined considering a discounted cash flow model weighted equally with the market approach which is primarily based on multiples of comparable public companies.
The fair value of our Family Brands reporting unit, within the Entertainment segment, exceeded the carrying value of that reporting unit by approximately 15%. As of December 28, 2025, $325.2 million of goodwill is allocated to the Family Brands reporting unit. The fair value of the Family Brands reporting unit was determined considering a discounted cash flow model weighted equally with the market approach which is primarily based on multiples of comparable public companies. Management closely monitors the operating results of all reporting units in addition to macroeconomic conditions and trade policy developments. Further volatility of trade, geopolitical tensions, or negative global economic developments could cause significant further decreases in the operating results of our reporting units, which may result in a recognition of a goodwill impairment that could be material to the consolidated financial statements in future periods.
Critical assumptions used in the determination of the reporting units’ fair value included management’s estimated future revenue growth rates, estimated future margins, and discount rate. Estimated future revenue growth and margins are based on management’s best estimate about current and future conditions. During the second quarter of 2025, the regional consumer products reporting units included discount rates ranging from 10.5% to 14.0% and a terminal value revenue growth rate of 3.0%. Additionally, the forecasted growth in operating profit margins towards the terminal value operating profit is aligned with industry averages. For the Family Brands reporting unit, critical assumptions included a discount rate approximating 9.5%, a terminal value revenue growth rate of 3.0%, and a
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terminal operating profit margin consistent with levels achieved in recent historical periods when excluding one-time impairment and disposal charges. Although we believe the assumptions and estimates made were reasonable and appropriate, these estimates are based on a number of factors including historical experience and information obtained from reporting unit management. Actual results could differ from these estimates, especially given uncertainty related to tariffs, global trade policy, and global macroeconomic conditions. We determined the discount rate using our weighted average cost of capital adjusted for risk factors specific to the reporting unit, with comparison to market and industry data.
Further, during the second quarter of 2025, we proceeded to perform sensitivities in our impairment testing of the Family Brands reporting unit by (i) increasing the discount rate 250 basis points, (ii) decreasing the expected long-term growth rate 750 basis points, (iii) decreasing the annual revenue projections 400 basis points, and (iv) decreasing projected gross margins 1,000 basis points. None of these sensitivities individually would have resulted in a conclusion that the goodwill in our Family Brands reporting unit was impaired.
The annual fiscal year 2025 assessment for impairment of goodwill, with respect to each of its reporting units, was performed using a qualitative approach to determine whether it was more likely than not that the fair value of goodwill was less than its carrying value. In performing the qualitative assessment, we identified and considered the significance of relevant key factors, events, and circumstances that affect the fair value of goodwill. These factors include external factors such as macroeconomic, industry, and market conditions, as well as entity-specific factors, such as actual and planned financial performance. Based on our qualitative fiscal year 2025 annual impairment analysis for goodwill, we concluded that it is more likely than not that the fair value of goodwill exceeded its carrying value. Refer to Note 8, Goodwill and Intangible Assets, in our notes to consolidated financial statements for more information on the Company's goodwill.
Our fiscal year 2025 assessment for impairment of indefinite-lived intangible assets was based on a relief from royalty method, including key assumptions such as the long-term growth rates of future revenues, the royalty rate for such revenues, and a discount rate. The fair value of each intangible asset is determined for comparison to the corresponding carrying value. If the carrying value of the asset exceeds its fair value, an impairment loss is recognized in an amount equal to the excess. Based on our fiscal year 2025 annual impairment analysis for indefinite-lived intangible assets, we concluded that the fair value of our indefinite-lived intangible asset exceeded their respective carrying values by substantial margins.
Intangible assets, other than those with indefinite lives, are reviewed for indications of impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. During 2025, there were no triggering events which would indicate the Company's intangible assets were impaired.
Income Taxes
The Company’s annual income tax rate is based on its income, statutory tax rates, changes in prior tax positions and tax planning opportunities available in the various jurisdictions in which it operates. Significant judgment and estimates are required to determine the Company’s annual tax rate and evaluate its tax positions. Despite the Company’s belief that its tax return positions are fully supportable, these positions are subject to challenge and estimated liabilities are established to account for events in which these positions are challenged, and the Company is not successful in defending those challenges. These estimated liabilities, as well as the related interest, are adjusted in light of changing facts and circumstances such as the progress of a tax audit.
In certain cases, tax law requires items to be included in the Company’s income tax returns at a different time than when these items are recognized in the consolidated financial statements or at a different amount than that which is recognized in the consolidated financial statements. Some of these differences are permanent, such as expenses that are not deductible on the Company’s tax returns, while other differences are temporary and will reverse over time, such as depreciation expense. The differences that will reverse over time are recorded as deferred tax assets and liabilities on the consolidated balance sheets. Deferred tax assets represent deductions that have been reflected in the consolidated financial statements but have not yet been reflected in the Company’s income tax returns. Valuation allowances are established against deferred tax assets to the extent that it is determined that the Company will have insufficient future taxable income, including capital gains, to fully realize the future deductions or capital losses. Deferred tax liabilities represent expenses recognized on the Company’s income tax return that have not yet been recognized in the Company’s consolidated financial statements or income recognized in the consolidated financial statements that has not yet been recognized in the Company’s income tax return.
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NEW ACCOUNTING PRONOUNCEMENTS
For a discussion of recent accounting pronouncements and a discussion of the Company's significant accounting policies refer to Note 1, Summary of Significant Accounting Policies, in our notes to consolidated financial statements.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically generated a significant amount of cash from operations. The Company has primarily funded its operations and liquidity needs through cash on hand and from cash flows from operations, and when needed, used commercial paper and borrowings under its available lines of credit. As of December 28, 2025, the Company had $776.6 million of Cash and cash equivalents, $105.4 million of Short-term investments and $3,281.9 million of total long-term debt.
The Company may issue debt or equity securities from time to time, to provide additional sources of liquidity when pursuing opportunities to enhance its long-term competitive position, while maintaining a strong balance sheet. However, unexpected events or circumstances such as material operating losses or increased capital or other expenditures, or the inability to otherwise access the commercial paper market, may reduce or eliminate the availability of external financial resources. In addition, significant disruptions to credit markets may also reduce or eliminate the availability of external financial resources. Although the Company believes the risk of nonperformance by the counterparties to its financial facilities is not significant, in times of severe economic downturn in the credit markets, it is possible that one or more sources of external financing may be unable or unwilling to provide funding to the Company.
The impact of tariffs recognized by the Company in Cost of sales was approximately $44.9 million during 2025. Significant changes in trade policy announced by the U.S. government could adversely impact our forward-looking financial results, including the timing and extent of cash flows based upon timing in customer buying patterns and changes in our supply chain sourcing strategies.
Indebtedness and Credit Facilities
As of December 28, 2025, the Company had $3,281.9 million of debt due at varying times from 2026 through 2044. The Company's third amended and restated revolving credit agreement with Bank of America, N.A. maturing September 5, 2028 (the "Amended Revolving Credit Agreement"), provides the Company with a maximum aggregate principal amount of $1.25 billion and also provides for a potential additional incremental commitment increase of up to $500.0 million subject to agreement of the lenders. The Amended Revolving Credit Agreement contains certain financial covenants setting forth leverage and coverage requirements, and certain other limitations typical of an investment grade facility, including with respect to liens, mergers and incurrence of indebtedness. The Company was in compliance with all covenants as of December 28, 2025. The Company had no borrowings outstanding under its committed revolving credit facility as of December 28, 2025. However, letters of credit outstanding under this facility were approximately $3.3 million. Amounts available and unused under the committed line, as of December 28, 2025 were approximately $1.25 billion, inclusive of borrowings under the Company’s commercial paper program. On February 20, 2026, the Company amended and restated the Amended Revolving Credit Agreement which extended the maturity date through February 2031 and reduced the aggregate principal amount to $1.1 billion, with the potential for an incremental commitment increase of up to $550.0 million. The Company also has other uncommitted lines from various banks, of which approximately $8.4 million was utilized in the form of letters of credit, on December 28, 2025.
In June 2025, the Company entered into a money market line of credit agreement (the “Money Market Credit Facility”) to provide the Company with access to uncommitted, short-term cash advances with an aggregate principal amount of up to $100.0 million. The Money Market Credit Facility is intended to support the Company’s short-term liquidity needs, including working capital and general corporate purposes. As of December 28, 2025, the Company did not have any outstanding credit under the Money Market Credit Facility. Refer to Note 12, Long-Term Debt and Other Financing, to the consolidated financial statements for further information.
The Company has a supplier finance program which provides participating suppliers the option of receiving payment in advance of an invoice due date, to be paid by certain administering banks, on the basis of invoices that the Company has confirmed as valid and approved. The Company’s obligation is to make payment in the invoice amount negotiated with participating suppliers, to the administering banks on the invoice due date. The Company’s suppliers are not required to participate in the supplier finance program. The early payment transactions between the Company’s supplier and the administering bank are subject to an agreement between those parties, and the Company does not participate in any financial aspect of the agreements between the Company’s suppliers and the administering banks. The Company has not pledged any assets to the administering bank under the supplier
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financing program. The Company or the administering bank may terminate the agreement upon at least 30 days’ written notice. The amount of obligations confirmed under the supplier finance program that remain unpaid were $45.7 million, and $66.2 million as of December 28, 2025 and December 29, 2024, respectively. These obligations are presented within Accounts payable in the Company's Consolidated Balance Sheets. The activity related to this program is reflected within the operating activities section of the Consolidated Statements of Cash Flows.
From time to time, the Company or its affiliates may seek to retire or purchase outstanding debt through cash purchases, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. During 2025, the Company repurchased $119.9 million in aggregate principal of its 2026 and 2027 Notes.
Refer to Note 12, Long-Term Debt and Other Financing, in our notes to consolidated financial statements for additional information on outstanding long-term debt and credit facilities.
Cash Flow
The following table presents the cash flow activities for 2025 and 2024:
Net cash provided (utilized) by:
2025
2024
Operating activities
$
893.2
$
847.4
Investing activities
(284.4)
(203.7)
Financing activities
(531.3)
(497.5)
Effect of exchange rate changes on cash
4.1
3.4
Increase in cash, cash equivalents and restricted cash
$
81.6
$
149.6
Operating Activities:
Cash flows provided by operating activities were $893.2 million in 2025 as compared to $847.4 million in 2024. The net earnings after adjusting for non-cash items increased to $1,213.5 million in 2025 compared to $787.9 million in 2024. The changes in operating assets and liabilities yielded a net outflow of $320.3 million compared to an inflow of $59.5 million primarily attributable to an increase in Accounts receivable in 2025 compared to a decrease in Accounts Receivable in 2024, which is primarily the result of an overall net revenue increase. The change in Accounts Receivable is coupled with a change in inventory purchases, which have increased period over period as the result of a strategic decision to build increased flexibility to better match product demand during higher seasonal periods, along with the impact of tariffs. Operating cash flow was also impacted by the timing and magnitude of tax payments, including the payment of the net deemed repatriation tax, in 2025 when compared to 2024.
Investing Activities:
Net cash flows utilized by investing activities were $284.4 million in 2025 as compared to $203.7 million in 2024. Investing activities in 2025 primarily reflects $105.4 million of purchases of U.S. Treasury bill investments, $63.3 million of additions of property, plant, and equipment, and $135.0 million of additions attributable to software development. Investing activities in 2024 primarily reflects $87.2 million of additions of property, plant, and equipment and $110.3 million of additions attributable to software development. Purchases of U.S. Treasury bills of $571.0 million in the prior year were offset by maturities of those investments in the amount of $583.0 million within the same year. Overall additions to software development increased in 2025 due to the timing of digital gaming projects.
We expect total cash capital expenditures in fiscal year 2026 to be approximately $250 million. We expect to fund our capital expenditures with available cash or cash generated from operations.
Financing Activities:
Net cash utilized by financing activities was $531.3 million and $497.5 million in 2025 and 2024, respectively. Financing activities in 2025 primarily include dividends paid of $392.5 million, aggregate repayments of long-term debt of $118.2 million related to the repurchase of a portion of its Notes due in 2026 and 2027, and $23.7 million of payments related to tax withholdings for stock compensation coinciding with equity award vesting activity.
Financing activities in 2024 primarily include repayments of long-term debt of $581.3 million related to the 3% Notes due 2024 of $500 million and the repurchase of $83.1 million of its Notes due 2026, net proceeds of $498.6 million from the issuance of the 2034 Notes, dividends paid of $389.9 million, and $14.4 million of payments related to tax withholdings for stock compensation coinciding with equity award vesting activity.
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Contractual Obligations and Commitments
The Company’s cash requirements within the next twelve months include accounts payable and accrued liabilities, other current liabilities, and purchase commitments and other obligations. We expect the cash required to meet these obligations to be primarily generated through a combination of cash from operations and access to capital from financial markets. Our long-term cash requirements under our various contractual obligations and commitments include:
•Debt – Refer to Note 12, Long-Term Debt and Other Financing, in our notes to consolidated financial statements for further detail of our debt, including letters of credit, and the timing of expected future principal payments.
•Operating lease obligations – Refer to Note 18, Leases, in our notes to consolidated financial statements for further detail of our obligations and the timing of expected future payments.
•Pension plans and other postretirement benefit contributions – We sponsor a defined benefit plan that pays benefits to eligible employees at retirement. In addition, we provide certain postretirement health and welfare benefits to eligible retirees and their dependents. Refer to Note 17, Retirement Plans, in our consolidated financial statements for further detail of our obligations and the timing of expected future payments.
•Minimum Guarantee Payments – The Company enters into license agreements with strategic partners, inventors, designers and others for the use of intellectual properties in its products. Certain of these agreements contain provisions for the payment of guaranteed or minimum royalty amounts. Refer to Note 21, Commitments and Contingencies, in our notes to consolidated financial statements for further detail of our obligations and the expected timing of expected future payments.
•Purchase and Other Obligations – The Company also has various third-party, inventory and tooling purchase commitments in the ordinary course of business. Refer to Note 21, Commitments and Contingencies, in our notes to consolidated financial statements for further detail of our obligations and the expected timing of expected future payments.
•Uncertain Tax Positions – As of December 28, 2025, the Company has a liability of $49.0 million of potential tax, interest and penalties for uncertain tax positions that have been taken or are expected to be taken in various income tax returns. The Company does not know the ultimate resolution of these uncertain tax positions and as such, does not know the ultimate amount or timing of payments related to this liability.
We believe the following sources will be sufficient to meet our anticipated cash requirements for at least the next twelve months, while maintaining sufficient liquidity for normal operating purposes:
•Our cash flow from operations;
•The availability of additional capital under our commercial paper program or lines of credit; and
•Our availability to access capital from financial markets.
Financial Risk Management
The Company is exposed to market risks attributable to fluctuations in foreign currency exchange rates primarily as the result of sourcing products priced in U.S. dollars, Hong Kong dollars and Euros while marketing and selling those products in more than twenty currencies. Results of operations may be affected primarily by changes in the value of the U.S. dollar, Euro, British pound sterling, Canadian dollar, Brazilian real, and Mexican peso and, to a lesser extent, other currencies in Latin American and Asia Pacific countries.
To manage this exposure, the Company has hedged a portion of its forecasted foreign currency transactions using foreign exchange forward contracts and foreign exchange option contracts. As of December 28, 2025, the Company estimates that a hypothetical immediate 10% depreciation of the U.S. dollar against all foreign currencies included in these foreign exchange forward contracts could result in an approximate $23.3 million decrease in the fair value of these instruments. A decrease in the fair value of these instruments would be offset by increases in the value of the forecasted foreign currency transactions.
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The Company is also exposed to foreign currency risk with respect to its net cash and cash equivalents or short-term borrowing positions in currencies other than the U.S. dollar. The Company believes, however, that the ongoing risk on the net exposure should not be material to its financial condition. In addition, the Company’s revenues and costs have been and will likely continue to be affected by changes in foreign currency rates. A significant change in foreign exchange rates can materially impact the Company’s revenues and earnings due to translation of foreign-denominated revenues and expenses. The Company does not hedge against translation impacts of foreign exchange. From time to time, affiliates of the Company may make or receive intercompany loans in currencies other than their functional currency. The Company manages this exposure at the time the loan is made by using foreign exchange contracts.
The Company reflects all derivative financial instruments at their fair value as an asset or liability on the Consolidated Balance Sheets. The Company does not speculate in foreign currency exchange contracts. As of December 28, 2025, these contracts had net unrealized losses of $7.1 million, of which $0.7 million of unrealized gains recorded in Prepaid expenses and other current assets, $0.9 million of unrealized gains are recorded in Other assets, $8.0 million of unrealized losses are recorded in Accrued liabilities, and $0.7 million of unrealized losses are recorded in Other liabilities. Included in Accumulated other comprehensive loss at December 28, 2025 are deferred losses of $8.3 million, net of tax, related to these derivative financial instruments.
As of December 28, 2025, the Company had fixed rate long-term debt of $3,281.9 million.
Industry Trends, the Economy and Inflation
The principal market for the Company’s toys and games and licensed consumer products is the retail sector. Revenues from the Company’s top five retail customers, accounted for approximately 35% of its consolidated net revenues in 2025. The Company monitors the creditworthiness of its customers and adjusts credit policies and limits as it deems appropriate.
The Company’s revenue pattern continues to show the second half of the year to be more significant to its overall business for the full year. In 2025 approximately 60% of the Company’s full year net revenues were recognized in the second half of the year. The Company expects that this concentration will continue. The concentration of sales in the second half of the year increases the risk of (a) underproduction of popular items, (b) overproduction of less popular items, and (c) failure to achieve tight and compressed shipping schedules. The business of the Company is characterized by customer order patterns which vary from year to year largely because of differences in the degree of consumer acceptance of a product line, product availability, marketing strategies, inventory levels, policies of retailers and differences in overall economic conditions. Larger retailers generally maintain lower inventories throughout the year and purchase a greater percentage of product within or close to the fourth quarter holiday consumer buying season, which includes Christmas. Quick response inventory management practices being used by retailers as well as growth in ecommerce result in orders increasingly placed for immediate delivery and fewer orders placed well in advance of shipment. Retailers are timing their orders so that they are filled by suppliers closer to the time of purchase by consumers. To the extent that retailers do not sell as much of their year-end inventory purchases during this holiday selling season as they had anticipated, their demand for additional product earlier in the following fiscal year may be curtailed, thus negatively impacting the Company’s future revenues. The Company is continuing to manage inventory levels and by monitoring consumer purchase patterns to ensure adequate supply of new product while clearing excess supply to mitigate the risk of inventory obsolescence.
In addition to these inventory management challenges, the bankruptcy or other lack of success of one of the Company’s significant retailers could negatively impact the Company’s future revenues.
Unlike the Company's retail sales patterns, revenue patterns from the Company's entertainment businesses fluctuate based on the timing and popularity of content releases. In addition, entertainment business operating results fluctuate due to expenses recorded in relation to productions and content such as program amortization costs and advertising expenses, which are incurred and recognized, beginning prior to initial releases and then continue throughout the related distribution windows.
Inflation
The Company monitors the impact of inflation to its business operations on an ongoing basis and may need to implement actions such as price adjustments to mitigate the impact of changes to the rate of inflation in future periods. However, future volatility of general price inflation could affect consumer spending. Additionally, the impact of inflation on costs and availability of materials, costs for shipping and warehousing and other operational overhead, could adversely affect the Company's financial results.
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