HAS Q3 Deep Dive: MAGIC and Digital Drive Growth Amid Tariffs and Supply Chain Shifts

Toy and entertainment company Hasbro (NASDAQ:HAS) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 8.3% year on year to $1.39 billion. Its non-GAAP profit of $1.68 per share was 2.9% above analysts’ consensus estimates.

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StockStory’s Take

Hasbro’s third quarter results were met with a positive market reaction, reflecting outperformance versus Wall Street’s expectations on both revenue and profit. Management attributed this outcome to strong momentum in its Wizards of the Coast segment, particularly from MAGIC: THE GATHERING, which saw exceptional growth through new collaborations and expanded player engagement. CEO Chris Cocks highlighted, “MAGIC continues to outperform expectations, posting 40% growth year-to-date,” with additional contributions from key brands like MONOPOLY, Marvel, and PEPPA PIG. Operational discipline and the company’s focus on cost transformation also supported improved margins, despite ongoing tariff pressures.

Looking forward, Hasbro’s updated guidance is shaped by continued investment in digital gaming, expansion of MAGIC’s Universes Beyond collaborations, and supply chain diversification to mitigate tariff impacts. Management expects momentum to carry into the fourth quarter, with new product launches and entertainment tie-ins driving engagement. CFO Gina Goetter emphasized, “We are executing our tariff remediation playbook decisively, mitigating risk and protecting profitability,” while also preparing for a robust content lineup in 2026. The company is focused on sustaining high-single-digit revenue growth and further margin improvements through operational efficiencies and strategic partnerships.

Key Insights from Management’s Remarks

Hasbro’s leadership credited Q3 gains to strong MAGIC performance, digital expansion, and proactive supply chain management, while highlighting cost pressures from tariffs and evolving retail dynamics.

• MAGIC: THE GATHERING surge: MAGIC posted record growth due to expanded collaborations with popular intellectual properties, like Spider-Man and Final Fantasy, driving unprecedented new player acquisition and engagement. Management cited backlist sales and Universes Beyond sets as key drivers for sustainable growth.
• Digital gaming and licensing strength: The digital portfolio, including Monopoly Go! and SORRY! WORLD, outperformed expectations, supported by top rankings in mobile gaming charts and new product launches. Virtual tabletop features for Dungeons & Dragons also boosted digital engagement, with weekly traffic up nearly 50% since launch.
• Consumer Products segment resilience: While Consumer Products revenue declined due to retailer order timing and tariff expenses, new products like Nano-mals and DJ Furby, and momentum from brands like PEPPA PIG and Marvel, offset some headwinds. Shelf resets and retail partnerships led to share gains entering the holiday season.
• Supply chain diversification and cost transformation: Management continued shifting sourcing away from concentrated geographies, projecting that by 2026, about 30% of Hasbro’s total toy and game revenue will be sourced from China and about 30% will be based in the U.S., as the company opportunistically leans into its U.S. manufacturing capacity. Cost savings initiatives have delivered $150 million year-to-date, supporting margin resilience.
• Tariff and margin management: Tariff-related costs remained significant, with $60 million in impact expected for 2025. However, productivity improvements and expense management are helping to maintain operating margins, even as royalty expenses rise within the Wizards segment.

Drivers of Future Performance

Hasbro’s forward outlook is driven by digital and tabletop product momentum, supply chain adaptation, and a robust entertainment slate, amid ongoing cost and tariff headwinds.

• MAGIC and digital expansions: Management expects MAGIC to continue leading growth, bolstered by a steady stream of new set releases, deeper Universes Beyond collaborations, and increased digital engagement. These initiatives are projected to sustain high-single-digit revenue growth and reinforce Hasbro’s leading position in tabletop and digital gaming.
• Consumer Products recovery and innovation: The company anticipates a return to growth in Consumer Products, fueled by new licenses (such as KPop Demon Hunters), innovation in core brands, and partnerships with major entertainment franchises. However, management acknowledges ongoing risk from tariffs and the need for continued operational discipline to safeguard margins.
• Tariff mitigation and cost savings: Hasbro is actively diversifying its supply chain and executing a tariff mitigation plan, aiming to limit exposure and enhance profitability. While these efforts are ongoing, management notes that persistent tariffs may continue to weigh on margins, and mitigation actions may not fully offset the impact.

Catalysts in Upcoming Quarters

Looking ahead, key factors to watch include (1) continued MAGIC set releases and the performance of Universes Beyond collaborations; (2) the pace and impact of supply chain diversification efforts to reduce tariff exposure; and (3) innovation and sell-through in Consumer Products, especially from new licenses like KPop Demon Hunters and upcoming entertainment tie-ins. Execution on digital initiatives and cost transformation will also be important indicators of Hasbro’s progress.

Hasbro currently trades at $77, up from $75.13 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).

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