Hasbro’s Restructuring and Weak Retail Create a Noisy Start to 2023; Long-Term Profitability Intact

We plan to lower our $114 per share fair value estimate for narrow-moat Hasbro by around $10 after incorporating weak fourth-quarter sales and a 2023 revenue outlook that is short of our preprint projections. We still view shares as attractive at a more than 40% discount to our updated value. Hasbro previously announced that fourth-quarter sales were set to fall 17% to $1.68 billion, hurt by soft results in the consumer products (down 26%) and entertainment (down 12%) segments, which together comprised 80% of period net sales. Impressively, the adjusted operating margin of 16% printed more than 500 basis points of expansion, benefiting from mix of sales and cost-savings initiatives.