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Hasbro (HAS)

Participants
Debbie Hancock VP, Investor Relations
Brian Goldner Chairman & CEO
Deborah Thomas EVP, CFO & Principal Accounting Officer
Michael Ng Goldman Sachs
Stephanie Wissink Jefferies
Arpine Kocharyan UBS
Greg Badishkanian Citi
Felicia Hendrix Barclays Bank
Drew Crum Stifel
Jaime Katz Morningstar
Tim Conder Wells Fargo
Linda Bolton-Weiser D.A. Davidson
Eric Handler MKM Partners
Gerrick Johnson BMO Capital Markets
Susan Anderson B. Riley FBR
Call transcript
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Operator

Good morning, and welcome to the Hasbro Second Quarter 2018 Earnings Conference Call. [Operator Instructions]. Today's conference is being recorded.

If you have any objections, you may disconnect at this time. At this time, I'd like to turn the call over to Ms. of President Vice Hancock, Investor Relations. Debbie ahead. go Please

Debbie Hancock

Thank you, good morning, and everyone.

Today, morning this Thomas, Hasbro's Officer. company's with performance, are take on Chairman we questions. providing me and Hasbro's will Deb Brian and Financial and Deb Goldner, the and Brian Joining commentary begin Officer; Chief Chief will then we your Executive

available website. investor Our was earnings our issued release this on morning and is

The on press non-GAAP earnings slides and release in and our containing investor also are financial presentation information website. Additionally, include today's available release and presentation regarding information call adjustments covered non-GAAP measures.

earnings discuss adjusted and share, A release measures are we will today call earnings or non-GAAP to included these is which presentation. adjustments. Please Our diluted EPS, of non-GAAP per GAAP share. to certain discuss referring measures, note the include per that in reconciliation we whenever

concerning remind events Before that make that members we materially cause of you Hasbro these question-and-answer or factors other actual and that are in during from could many differ this statements expectations, forward-looking like I expectations may session would results and the similar or matters. anticipated follows, management's expressed results begin, statements. management the There to goals, objectives to call forward-looking

obligation would or on reflect are this now update in to set of no Goldner. of after in Some factors any I those our today our Form Annual forward-looking occurring introduce made events most press and to like Brian? forth disclosures. Brian the in undertake public call. We Report release XX-K, statements today's XX-Q, recent circumstances date to our other

Brian Goldner

as liquidation and European the Toys“R”Us us teams for the in many today. everyone, evolving morning Good expected Thank of you, Debbie. you thank rapidly landscape. managed joining XXXX our unfolding as retail markets addressed is and

lower anticipated, were quarter, on its of in liquidation revenues both revenues the reflecting marketplace. down the Toys“R”Us and impact the As

through May a entertainment and investing maintained break one XX we and every according number organization. XXXX are remains in innovation, despite commercial retailer We’ve We to declined. revenues. to margins; takeaway and from deleverage lower markets compelling consumer month modern the G expense also positive, NPD resulting in Importantly, operating inventories deliver were ranked good frame

are investing addition two our business, of our we’ve repurchase of repurchasing take dividend well purchases quarters. target as year, of and anticipate $XXX market, with to increase this U.S. shareholders which retailers This excess our plans opportunistically in significant retailers, to includes offerings. XX% second returned cash to an previously half We In through quarterly capitalize the of shares million the on throughout the total approximately our first the consumer the beyond executing back million in additional Toys“R”Us shares With retailers delivering the programs, Hasbro the $XXX we on of unique year, online meaningful out will communicated. new existing expansion as opportunity.

As the environment, Europe, with dynamics markets the by of should in lost effectively said and European which is XXXX, expect bankruptcies addressing we changing In closing in retailing. team but we of our and Toys“R”Us. revenue most brick-and-mortar we of before, this industry the in growth rapid the year. Europe a Toys“R”Us our business XXXX, additional moved beyond evolving retail don't online ongoing to have characterized recapture is retail by in coupled impacting is purchases The challenges and retailer all

sales game in and through are toys NPD to according May. Europe down fact, In

organization this remainder through base in right the in too create resolve. created at much with with number retail anticipate will a new We factors accelerated of situation, Europe, investment a brands. marketplace. modern take inventory XXXX the began These near for our cost to XXXX which we also to term We a omni-channel of commercial

online product innovative all content delivering to a programs at established which Blueprint to retail. us growth. ensure times Online retail. drive retail marketing converged enables team profitable overall, are the consumer to rate a than capitalize We've consumer by faster this and products several behavior channels Hasbro grow that to supply point-of-sale and for across in continues Brand we analytics, offerings commerce, global of chain, on Our digital investing

in and engagement We marketing direct-to-consumer to are world. develop around investing digital media the

established Partner retailer, are right in channels for We We’ve progress the and beyond and Consumer and price mass brands, create retail U.S. JD.com's Gaming years, Brands. best the including focused the exclusive few products also online retail, support supported on points XXXX, Prime team Day Hasbro Day and following partnerships day. In such online. the Takeaway development and products product regions specialty and across past is begins is with and our the XX/XX made as the over and new to channels Baba programs are of singles our Walmart Activating significant J.D. and Target event brands, to Amazon’s by executions. creating retailers, a each franchise for executing We roadmap global many channel Hasbro this locally. and toy and opportunity Ali retail up

Rangers, and around and executing During see expand property including consumer with iconic to led innovative retailers, enhancing acquired will which this we broader, multiscreen brand line, a Power story develop both gaming Hasbro's more opportunity digital the further our content. tremendous while Blueprint, quarter, we deeply further more geographically products We brand across portfolio.

Cool, Rangers months. In be North as activating gaming our XX% American out six first MAGIC: DUNGEONS IN be year portfolio as through roll MONOPOLY is entire in the uniquely will including continue through quarter, with it these sell will prior MONOPOLY positioned MASTER, Wizards on second Hasbro had GATHERING Dominaria to Gaming. the opportunities. and games second one social in Hasbro’s the Portfolio in the DON’T quarter, growth DRAGONS, well as increase driven the THE franchise property category support will and deliver XXXX, consumer revenue behind driven STEP quarter By increased In with our earlier Shots. we THE by with in will revenues, including reengage insights, IT. insight total Four across and the Edition. Coast this to market the product. second attracts Your and XXXX grew retailers of as and year-over-year. around the several well line Crown is year, Digital biggest in with gaming in Our team and and growth player’s MAGIC: its the and long-term DUNGEONS to both and on brand as spring Connect Don't a XXXX, growth including JENGA In all new then new new of the further as in several gaming, be based of players. strong DRAGONS Point-of-sale Cheater's this GATHERING DUEL grow grew new well the the half released transition double-digit in quarter brands launches. XXXX, blueprint. face-to-face our a fully world. are new in there Power will this way Chow innovation, of growth Lose fans

In quarter, revenues brand to taken our the successful listening portfolio. faster market beyond our within franchise in social increased and This brands emerging Lost Baby games the and addition launch Kitties approach Alive we’ve Stars of brands, the our Lock quarter. portfolio, in games, with

seven we taking place successful markets, After is new starting retail a NERF XX now. year, Our second in different FEST last debut innovative featuring event a this made global annual blasters. and marketing

anticipated Ops the NERF we In highly addition, announced Laser recently Pro.

to unique our supporting with continue strategy We our content execute multi innovations TRANSFORMERS, new each for screen product of stories.

this In Bumblebee Cyberverse” targeted airing fall our coming have Network. animated kid Cartoon series a “Transformers addition feature new film to TRANSFORMERS, we in December, on

pre-school and and We Prime also Rescue with product our series new fan continue targeted with Series all of targeted Power Bots innovation. the content

final Our Hasbro's films Pictures XXXX. theatrical exploring The animation which in December release in franchise. place Rescue from support for of later future date and the Cyberverse dates is was TRANSFORMERS Bumblebee by to series. Transformers Paramount driven studio timing of shift home XXXX this the producing and a the are and both takes the entertainment films window Allspark the Bot

portfolio Toy entertainment extremely merchandise. gains. behind Line the both revenue sales War, brands growth Infinity for robust results Our continued saw BEYBLADE from Black and positive with well benefited also multiscreen point-of-sale as and Marble, partner as Hasbro's strong MARVEL Avengers, delivering Panther

& are lines U.S. the and Dead being point-of-sale retail by product and Wars revenue Pool, In The Man Verse the Spider-Man programs. robust Venom was strong and In supported the into Star marketing grew quarter. Wasp, in Spider Ant positive. addition, slightly

new product for was vintage Story line consumers and Image Wars Outside collection. Star our to are successfully selling plans are focus, A teams Our result for we Wars inventory. variety.com the with and retailers Star long-term by working story profitable was Series develop our objective Black fan multiyear U.S. growth. received Solo: through as our of delivering In closing, our we growth affirm carryforward well

the and program with momentum, for and slated year. good are remainder the have Our brands storytelling innovation, of meaningful marketing supported

up over we a be expect with to brand along I beyond like to would to Deb. the to great entertainment we content new setting of return robust now to slate, and year innovation look including with engaging multiscreen As XXXX, and launch the Power storytelling Rangers. XXXX growth. is Deb? turn call

Deborah Thomas

the in good Brian Revenues lower continue morning teams despite Toys“R”Us, steep and in liquidation the you, the of Thank revenues delivered to market. negatively Overall, profits carry-on and and market. the of on be everyone. by the impacted both effective good quarter, discounts a challenges terms Hasbro

where disruption, segment of helped political and increased revenues our ended shareholders through continue the U.S. repurchases and GATHERING, These Hasbro's Austria a retailer credit. entertainment done. Toys“R”Us MAGIC: that of are extending since International year, declined sale revenue start are markets and combined higher around also in of closed been process is around the and DUAL clearing retail Retail in payments of While lower returning profit balance through be and cash impacted meaningfully are Retail major impact improvement countries categories. the our markets million and Growth they Rangers helped Both declined growth fixed allowed more impact trucking being made quarter for with down affected Switzerland dollar which without Toys“R”Us in but segment including This the positively and continued devaluation negatively also has expect in or exchange. impact In portfolio world. foreign last in work revenue licensing decline the in future Canada, the the a European addition with million revenues. with impact America, in partially and with and lower year on quarter. MONOPOLY, or from of and goods the the we dynamics X% emerging strong inventory in such of $X.X the and return the the the quarter favorable second to THE revenues dealt Asia Changing product expenses was brands quarter. operating the This remainder inventories XXXX. deleveraging impacting of process reflects in ongoing. as offset to biggest line there revenues Europe, in the region profit impact, Currency Throughout other quarter. in the from revenues. expenses us U.K. XX%, such most versus secured. carry in gaming In impact point-of-sale to and we down MASTERS brand had billion both the shareholders. notably favorable Mexico revenues margin. is markets, short-term created in $XXX quarter $X.X acquirers margin margins Currency cash. U.S. markets Germany, developed forward Australia a and each Brazil of impact this segments, Canada $XX.X the our to We the of and Canada environment Toys“R”Us. inventory. impacted The portfolio potential and our declined factors for basis DUNGEONS revenues. while is delivery and difficult. loss revenues. DRAGONS segment long-term the the is of as during the dividend segment million with retail of and diverse as in million sheet revenue the $X.X decisions to in $XXX include million declined product Within teams year. a uncertainty disrupted ongoing Revenue with in have and had U.S. countries offset Latin a many to this our and economic cash all had and approximately to approximately Power offset the share will lower $X.X investing Favorable mix the had million Argentina operating deleverage point XX.X% XX strike for our

a with in up. with a had Pacific, This and profit last franchise this The In Asia, point-of-sale ship grew year's up result in June. we fixed We absent in the the shut In operating very are them. but revenue the exchange $X unable were which lower the retailers impact reported working we favorable the revenues revenues, foreign TRANSFORMERS profit the The were strong difficult $XXX,XXX. was Despite absorb cautious faced million continue we operating heritage still lower catching has of quarter. challenges, Asia. with Toys“R”Us movie region Asia comparisons also X% Currency as to costs. segment in was down international primarily region. to how Australia, of

segment revenues cost with We XX%. continue structure changing to landscape. Licensing Entertainment retail right in our line and increased the to look size

record the new from recognition standard we the As when of revenue quarter, licensees. our case adoption impacts was revenues the last

our In this increased Hasbro ongoing contributed segment’s basis The businesses, segments XX%. the standard of Overall, margin addition the and to profit to success higher adoption operating licensing declined the entertainment XX points. operating revenues. in profit

half and changes, we declined operating full-year continue As mix the well overall Favorable absent profit XXXX the higher to brands revenues MAGIC: such from GATHERING margin charges level. we gaming as of beyond. most enter offset Licensing year, XX Most as revenues of basis Cost last of approach improvement and points. and partially see as associated impact Entertainment in sales lower revenue. THE product our year's in profit Toys“R”Us importantly, with opportunity organizational could important

Toys to We of Europe combined for expect our "R" on the year loss inventories with XXXX. gross of retail primarily have higher a Us, continued short-term in impact pressure full the margin

anticipate of amortization prohibiting few returning years million However, expense next to amortization included year-over-year associated we percentage $XX due on the brand is us approximately million there in and declined revenue as in $XX believe was nothing of a Intangible down and half approximately XXXX. We that the the XX% million dollars, and lower acquisition, of acquisition partner over in the a incremental Royalty with in XXXX gross $X second to Power Rangers. expense from approximately margin. revenues.

As production in movie our XXXX television programming. “MY we’ll addition Program revenue line this begin are with associated as to record PONY”, increased indicated, production the amortizing LITTLE to for in amortization Brian we brand. expense

production contributing began part funding the arrangement films second During cost financing Paramount, Bumblebee. for under we our quarter, to with of the

due costs will shortages The by relation expenses. at trucking this higher driver the profit, in this SG&A warehousing begin higher to other a not a until on freight the percentage quarter, We operating exchange warehouses. costs the any warehousing greater foreign result expenses, loss and XXXX. production regulations U.S. last. higher as contribution amortizing in caused are in inventories increased to of due revenue freight mainly largely and declined primarily Below the our year of versus and to new income

rate communicated of tax the to event the year be XXXX. tax of an will high-end tax updates rate and additional XX%. going this to the reform consideration quarter, guidance forward. of to require of although reform The believe reflects year reform. underlying full tax rate full XX.X% lower our compared previously underlying benefit on will and XX.X% was for we discrete were tax rate U.S. There that last at underlying XX.X% absent We interpretation Our year, range continue our XX% no expect

mid of cash approximately quarter, approximately acquisition June, Rangers million of stock to For we were X.X At we other closed entertainment assets per $XXX the Properties. second million closing, Saban and common Saban. and $X.XX. Power our earnings issued share from in shares In on paid

when count in payments to the due the quarter, Due going little of shares very were outstanding impact had will cash in shares earnings-per-share our XXXX. they the remaining $XXX have on impact of for issued, share million timing We but forward. the

we quarter, bringing stock, repurchased repurchases During $XXX.X in the million to million. our common second $XX.X year-to-date

target our of to expect the open the previously We for market, reproaching communicated opportunistically to continue exceed expect now shares and $XXX year. million in

full $XXX.X conditions. and available at million shares debt-to-EBITDA remains acquisition ratios Our at XX XX% repurchase outstanding end sales to Both issued the favorable Hasbro's depending the remained quarter Power $XXX.X our million Actual market with to in our repurchases decreased current authorization. are Rangers offset in could shares were connection on to X.X and outstanding balance days days. EBITDA respectively any share sheet strong. and our targets. interest’s year X.X decreased Receivables

Excluding the impact exchange, XX%. foreign receivables of declined

quarter. While Hasbro inventory during declined were the retail Hasbro product down revenues point-of-sale increased and of

activation the inventory greater the to support Our retailer second owned of U.S. half increased in the primarily year. in

Europe, retail Hasbro. Foreign at $XX.X exchange down decreased at value is the by and In million. inventory inventory

the the half period greatest We the business. when are our is the of to anticipated year, which first disruption through we

work real the begins. Now

teams quarters the the the of our around biggest holiday world Our are season. including executing year,

with come. not XXXX, are to retailers our many We but and collaborating game important categories, plans the toy just and for for activate successful joint to years

teams the in sets ensure customer the time, challenges. years skill geographic have come. strategically and a costs brands, At to managing same to faced Our we entertainment we for will be focused investing lost year, significant successful the on we've to be and

for open now will the We questions. up call

Operator

you. [Operator Instructions]. Thank

question questions. is the Please First your with Sachs. of state from line Goldman Ng Michael

Michael Ng

Brian I Thanks one question. one for Good Deb. morning. for for the have and

just it for I from Brian, a outperformance, pretty million wondering whether up then $XX the MONOPOLY combined, increased D&D could have especially that’s like that if or you Wizards Deb. and revenue Amonkhet versus meaningful for size a looks Q-on-Q. by of Coast acceleration, Dominaria was help the I First follow the was and

Brian Goldner

addition that great and THE then nationally different And in are seen are the of the cheaters addition We began great on there recently gamer just that out earlier perform next initiatives for Sure. that at will high growth Well it’s we roll clearly it’s a going MONOPOLY, couple have a MAGIC: both very Monopoly. saw of this level, we continued in GATHERING the couple and off to weeks. and a start year, there. launch to

has was continued focus to board, been reception high and the The second is we’ve of to the the gamers an brand which GATHERING level. gamers For always quarter Dominaria a in MAGIC: THE uptake coming fact very new and great in and storytelling fantastic. on strong Dominaria performed very in increase see at in

fans. QX rest territories some we’re in launches year, QX, of in the the some our returning again then new favorite see of For the games, you'll and to for

hear increased and now get to continue and interest the the positive great the million more Magic to beta and in We in for we to sign closed KPIs also continue the feedback Arena. great for were quite and gamers our addition, listen up seeing we’re feedback, a their and than had and We’ve making feedback good. progress there, great people

are going year. of to initiatives remainder both certainly additional for the So with and contributing we’re brands those the brands support

Michael Ng

and And a ex sorry thanks. but with the international. how Great, POS if U.S. comment I was Toys“R”Us Deb, on you and Toys“R”Us this, missed could much up global

could a better? just of differential or comment versus set. looks traditional card Thank And the with points sorry, Are hundreds thousands Brian follow-up, on we basis like margin you. basis points of Arena for you talking MTG the

Deborah Thomas

So but down up smidgen from Toys“R”Us the with a POS that the it and quarter up standpoint, a year-to-date. was was we Toys“R”Us did without year-to-date POS global quarter PO, say in and

Michael Ng

And Brian?

Brian Goldner

to the MAGIC in software so software investments launch build you time, Arena look we’re investing game. us if have to to margin successfully, profitable and the but and business, very so, and you we Yes brand right haven't now, the the communicated is but we continue is clearly analog for want accretive the difference, clearly over the at business obviously

Michael Ng

Great. Thank you, both.

Operator

your of proceed line the from with Wissink with Please is Jefferies. Steph question next questions. The

Stephanie Wissink

about question possible, properties a want investment. Michael in Brian, it of and the gaming everyone. some future? bit for could morning just you software Is regarding platform Good Arena. and Thanks. that follow-up business leverage little you that on I could talk that the Magic to other

Brian Goldner

– of continue the as and we’ll capability number to we our that but the It’s we going certainly in add bringing size launch Wizards are for signing time, a see GATHERING role-playing we people I the Magic to that games THE that we was digital THE then closed gamers GATHERING to investing gaming and And over Well, to suite new of come at you are suite as Coast, with Arena up in to that the of both team this had and Arena. brand MAGIC: other in building on face-to-face to overtime quarter to both an well. side of and Dungeons we business of and both number the we’ll games but our levels. the And and and as the then course continue know games. opportunity beta years, are analog also come additional which year, exciting there said grow Dragons, the intention to the in doubled games. more of iterate is gaming it also leading, double-digit growth And we capability very over was games mobile think that his business in company are it's of again, around the these THE and as our analog of different that MAGIC: as across felt new Chris from a on double in up dimensions arena, MAGIC: see continues GATHERING, well board to games. digital

Stephanie Wissink

ask Thank you. margin just on I up follow one commentary. Deb, could if your operating

you the approach XX.X%. operating last you to level quarter said year's could profit margins with you on call expect you of this think first thought On you would achieve in line XXXXs I level. said today, call

level might about help in but margin target So the could thinking how Thank you. maybe small year? the be your think the for just about tweak you a wording, us operating

Deborah Thomas

some on Sure, forward. items Steff. our and On go there a as just seeing change, some we – is was margin of gross we’re what pressures slight

well say quarter. we you know, executed look this we we very the teams forward, and that while So think

region. inventory in every Our retail down every is virtually at

expected to of You meet demand the up it's up meet for know is our and held primarily the to year. in the rest inventory U.S. the

we’re out that, this from gets but the most, most system. see pressure just kind profit but we be of fully after of could there that our up in last think firmly believe levels worked we a Toys“R”Us on still bit that we importantly, year, growth disruption set could of operating However, of

Stephanie Wissink

Very you. helpful. Thank

Operator

The is question. line Arpine Please the next with of your UBS. Kocharyan proceed question from with

Arpine Kocharyan

good you thank morning. Hi,

order terms you back absorbing currently be have are it what the terms in quick how book, a the book margin. of and would possible follow-up then for have actually to competitors In on on half, quantify order question operating much I

Brian Goldner

Well what you are Arpine, asking competitors? say retailers do are our you or taking

Arpine Kocharyan

me Right. big given from It seems linear end in terms at that interest feed, retailers looking by what initial committed was linear in be feed backup to absorption of of for terms What today, August helpful. the of color they've any in terms adding you're what they in Toys“R”Us. would are of

Brian Goldner

Sure.

we opportunity be major retailers well our as our that plans that and with excited with are would making about I the are and we U.S. additional them meaningful and expect are major team teams online excited will seen the opportunity the making our -- between that in for area, in we put in as are that similar stepping – or Clearly, are a that significant There's up, that ways years promotions year-to-date, retailers. and to converge to are focused the and say share our executing. the year been retailers growth opportunity billion the cases working whether have opportunity fans stepping a new opportunities plans plan While on gamers audiences, we capitalize that and good retail see could industry retailers who many on plans number recognizing industry. across partners specific And some then we up footage ago. omni-channel sporting-goods together retail for very or you of execute and the the alone. new that to we've different a about is recapture order has linear are so $X.X in

to all are we partner the said, to continue to our suggesting make industry. retailers we in our as not not to significant great together want up course, over growth we all that to this can grow get we’ve but that year. that only successful of we’re growth so of Because but the year, progress ensure their we in going sustainable we be this business Toys“R”Us this make is difference time we with business expect of that Now that

Arpine Kocharyan

just points. for helpful. right that then back Right, up Is you now can obviously operating expectation disruption down, something that confidence, back like is imply you basis back Or that for have that’s that less? first it that back be the you year-over-year gives flat your half imply to from up mix your it half to has would Toys“R”Us margin profit the is some disruption, half? in is to is come that happening And operating there that's to margin, half XXX Toys“R”Us would in that profit make differential the

Brian Goldner

Let I as me comment and know Deb comment would well.

of We have a half the lot second of new initiatives the coming in year.

our operating and new product coming We've new commented marketplace. seen a BABY lot NERF all into the NERF lot Obviously portfolio. in we of markets lot different a so And innovative gaming products. new strong NERF, blasters seven supporting seen growth ALIVE. of about our brand. We've franchise Fest margin product innovations, across of talk business on. given we enjoys have The of the in segments We that's growth great NERF XX

our business We continue perform high to believe games level. a will at

So and leverage the has retail dissipate build our that and benefit to margin. these us gives grow we of beneficial programs, we through work issues again all retailers with continue as continue of mix And then operating we in to as and a certainly inventories to work is our some areas. the

Deborah Thomas

are not the we've in been some the retail We outside where some some the disruption continued credit extending of emerging seeing U.S. decisions markets particularly and and as that's our been impacting well credit.

we strive that the we Hasbro growth about several So, years. still profitable has still for past that been believe for that

and about to this talk us of all but fundamentally time. on in Toys“R”Us continue watch believe still year, environment, we just we growth work retail disruption. This after very hear a through disruption You the the we profit there's focused because operating

Arpine Kocharyan

Great. Thank you.

Operator

Please Badishkanian is of question line your next the with from with Greg Citi. proceed The question.

Greg Badishkanian

Thanks.

a little down the is bit you soft. impact the Just versus industry think there? the POS? industry the the in was it with in first Then Toys“R”Us of expectations on line compared I Europe to how basically was which from few questions for Hasbro's much retail NPD dynamics the does mentioned How also and half. Is

Brian Goldner

the On X% up take about out to was you and Easter. up if our between the take side year business Easter When year-to-date. to-date impact similarly were industry we the you industry

our down couple it Europe couple France through UK the than in work are the was in the as and and particularly of industry driven decline really and to So, there sales business greater our that. markets industry – continue we was the was was in where

heartening if more down are than inventories our you retail shipments the at are was think sell-through. lineup our and far look is I our down

get half able been channels better we've now initiatives in retail and to a where for cleaner new the coming have year. of second place So we to the

And progress so great making retailers set up well half. and team second partnering for I see that with good a the

Greg Badishkanian

that basically is Toys"R"Us you this so to impact? expectations And going mention according and did

Brian Goldner

in expectation business activity Yes. we in but owner. and and no goes UK and Toys“R”Us liquidated on -- then in Germany, Poland have almost going And new then The the remember that no away. Switzerland, what's in there's that And in owners, the Spain so liquidated our Austria is Toys“R”Us, that Toys“R”Us new a France, Europe.

omni Then retailing compete our we're some emerging-market that as the Europe multi-nationally particularly there's can you the a working they to but for and and of and entire we us pay certain channel retailers new retail credit been do work impact in the are only and acceleration with of out their markets. retailers and disadvantage that a to EU. at retail growth product where who go online landlocked product part terms some you in ensure are across the had that so to we unable have who retailers of changing that's the So to landscape have business different process the access that in want we versus take of and there online have number across markets mentioned through Deb

and mix ensure and the the those are we're through that shift right that holiday. change retailers seeing and a we have partnering that's the so And good programs different we're dynamics with to how

Greg Badishkanian

Thanks for the color.

Operator

The question. the Barclays next your with Please Bank. line Hendrix of Felicia question from state is

Felicia Hendrix

Hi. Thanks. morning. Good

Brian Goldner

Good morning.

Felicia Hendrix

Hi.

model? that rest there will been some wondering us revenue do guys Toys“R”Us the be a to do bit because now through the it's U.S., declines they year? the difficult which behind, U.S. take said behind? the granted lingering and liquidation think year, currently second of But how you and I I stuck you I'm some bit the inventory you're think So think color you I could of much quarter for to as But the that consumers advantage worst still some the want where to Deb, given just took like in the thinking in liquidation pantries a as did holiday with clearly want worst the has have you Europe complete help too don't do you also is is seems being is period? about of now affect So worst admittedly know how Toys“R”Us

Brian Goldner

remember initiatives for discussion when Let Toys“R”Us, have that that was to new about access pantry. I'd the year. coming me the any say liquidating comment on half of the the were of the second they didn't Toys“R”Us that

have as two our movie. also initiatives that product home well come Bumblebee Transformers with as We entertainment windows Spider-Man come around new Avengers. The movie in a big entertainment

comes We second have Panther. half additional Black product the that's in for

initiatives of the and noted, new product the initiatives ALIVE BABY lot for So product there's new I NERF across board. really and a

on wasn't product retailers new we're certainly So that's new Toys“R”Us not initiatives. that working all all now our and at -- and with

Deborah Thomas

And in from QX year. QX Toys“R”Us, or felt be the so we whether you're of the us, that but we've part magnified we think disruption the going from up, certainly we right on Felicia I'm expect impact not the From of we're second quarter. would to comment biggest said percentage kind the biggest early and behind the gets into the the quarters is decline because first of be in the year. Everything beginning to going bigger

is we're really the total what focusing So on. us which in we be think after disruption this should behind year

Felicia Hendrix

you if also think for Toys“R”Us Thank transition call for us Helpful. is just of versus think the out permanently? And do And brick-and-mortar? new much be you. talk online was the business how retailer much your how that other do Okay. then of And you about much you Brian, initiatives, wondering you as I retailers? how will then, could lost

Brian Goldner

going marketplace. the the think don't in discussion really not from out wasn't I business reason Toys“R”Us is a long-term it that more case. been loss there us for the The of a result is retailer, part some that was as that retailer, Toys“R”Us there that's that profitable

that. to how we of do our with we and all grow. can agnostic about We're other fact work In incentivized retailers

the families to and to people product wonderful as holidays and that have this give programs. in has retail. because there increased giving at going to Christmas families omni you're footage very holiday immersive and online past fans expand kids holiday experiences and think linear programs Certainly see it opportunity excited about shop on will and are channel entertainment experience opportunity display the and be see I

what people shopping look determine working quarters connecting. of or are initiatives every online of video least been And piece of at is a commerce other have interested on it where content number in. of team some being is search trying clearly short visit to some product. they're informed Our to well may and informed for three retail They by is the ways are at by or content them as

is U.S. about retail we've we're what not the really what this think idea a but I in converge try the around to of taking lot really So talking is mention hold that world. and only

the or are to that because fans consumers some and content generated digital bespoke selling. connects insights, and content the whether that and engagement innovations our our up, contributes of to the is marries on that initiatives consumer where providing engagement user so working we're it are to what teams process in-store so all be story those engaged the led And experiences

Felicia Hendrix

on future, just Helpful. should margin? begin Rangers, Okay. model operating as to then that property a the total margin we into to And finish your versus higher be Power expect we

Brian Goldner

the should it Power and more XXXX. look like we've beyond the It XXXX full and will over by team of that initiatives by Rangers should said And array time brand blueprint have -- Brand. a Franchise

Felicia Hendrix

Okay.

Brian Goldner

margin, a in is points need yes, the that of us time should new Brand we because year. enjoy operating recently. the little to acquire as for fact work terms it's higher to a and making like been Franchise than Franchise opportunity rationale Brand which But Obviously XXXX operate Brands that had it in and one profit most of growth company it's in brand Franchise is we through transition brand significant to the average a a given brand a also know operating our where the

Felicia Hendrix

much. so Thanks Great.

Operator

your of proceed Stifel. question. next with line Crum Drew is from Please The question with the

Drew Crum

you Brian, is Thanks. little if the I of you in Hasbro's this wonder could over at update year U.S. tariff on decision comment on time everyone. of ago the and morning made to I any outside the manufacturing doing And your you X% topical very anticipation and more China. think a think then for hope have to to manufacturing Good move the PLAY-DOH potential I you said what And that? of

get So have just update I want an there? then And to a follow-up.

Brian Goldner

Thanks. Yes.

have manufacturing territories. years. today do a XX% head in of few over toward outside next of we'll and We're we XX% So number the China our of manufacturing just

fall the across in manufacturing For states. United that, manufacturing that will the up gearing of that XX% add We'll for come PLAY-DOH in U.S., revenues different now. this we locally five the we're source U.S. States to

revenues manufacturing should that our from U.S. that garnered so And to the add U.S. for

China. seen production that high specification. great and territories and are the the ensure in moving just outside that schemes don't and been U.S. XX% still far but receives meet our China, And to nonmaterial talking the tariffs our Thus And the quality more to really partners business ongoing with so XX% of product countries to terrible business. from trade administration outside an changes We we we've impact tariff with new that communicating can very other delegations again, be. its impact provide of the terms congressional of overall of or products would war we're working and again how Chinese found of some our manufacturing, tariff we've only

Our place. industry. free is continue of for put environment talk XXX believe best the toy business in to our currently the to is not we we in as trade course continue been and the firmly monitor and situation that for designation and company a part been But the

Drew Crum

Got it.

from its in amortization, any and the to in back terms whether from you feature going then And and detail what commentary rate helpful. are Power side your provide Rangers run Very and you're your guidance of television expecting margin on content plans that films? of revenue guess I programming can Okay. separate or the terms the development

Brian Goldner

Yes.

families development. TV in the the was then we is that it underway And just next creative, working made but exciting with So we're right for the TV do the the in movie see team think Nickelodeon through have expect we're some development, on already. is had really going XXXX the that development product XXX pictures series so and as time on and the kids have next Wars early with also show the to team creative and excited medium about U.S. distributed launch engaging We spring, Obviously, really I Beast the new we earnest for then And do our for beyond. brand motion series add very to series XXXX new you with and audience. TV the that's the have by we'll for transaction. how of now we this over reinvent for as than the term, feel working we'll territories globally. fans, brand and arrangement more really well, We're you're an from and already

We a a and was Just being the that and not to the lineup few is and first a licensee business of very product with prior retailers. XXXX recognize certainly in excited. a at retailers have as footprint. we've shown very done lot global that you developing And that They're robust. were to

depth opportunity growth. the as territories the breadth where well the us gives an from of of breadth for geographic both now retail and product as So both exist will

Drew Crum

you something that do a guys or would partner you would or that in-house outsource Brain, And is with the studio? film larger

Brian Goldner

Yes.

with in and part optimal that's if to those We're content and been XXXX great know course board. with do again of it's board. for And like. around studio looks partner. a on in a that animation. the what we we us We on return movie our the creative would production share partner one a PONY come also our the done we'll would excited that so partnership consultant. team recognizing as ensure endeavor that's understand you creative studio recall we have acquisition with we distributed over the team We excited and we budget optimal it the investments was of that and expectation partnership with studio, prudently that similarly done You it the the the brought was this successfully studio LITTLE And that make We're recognizing. that in so pick as working And the Haim they're creative. the in MY did profitable both is on is movie continued a

Drew Crum

Okay. Thanks guys.

Operator

question your is proceed next of Morningstar. line Our from question. Katz Please the with Jaime with

Jaime Katz

you expectations Good morning. you or metrics XXX the Thanks. still of the in be have million for working capital can that flow even that year? end in high think the number? that I'm improved? exceed Or and guys Are operating Hi. sticking do potentially cash guys given curious you come XXX you some at report with may

Deborah Thomas

XXX pressure to on and to of given the top bottom we be the would probably range our cash the be just believe No. between flow end million closer than of that will year, that We the still end. XXX

Jaime Katz

would asset? time? asset then, exactly can be? into that amortize other Bumblebee process that I then you Paramount And you can't accounting Okay. the recall category the asset of it the and where remind me go Does over

Deborah Thomas

for Yes. payment had won't associated cash quarter. production it our our you'll see will It's the that the And flow for that and in quarter, program we out then be other flow with up go over cash time. XXXX amortized flow our is until amortization long-term this There cash contribution, assets this that be though. in

Jaime Katz

Excellent. Thank you.

Brian Goldner

line from with is of Please proceed with Conder Tim Fargo. next the question. question Wells The your

Tim Conder

Thank you.

couple of a Just questions.

just DISNEY a can then little then to And leaning what someone Star colors two year-over-year as Are out on DISNEY a shift any or you comp, TRANSFORMERS, looking here maybe of the wall little doing a to that You've at give of but properties. difficult the year comments looking or on next the shifting then franchise? reboot over more but towards have us obviously commented is doing, you're maybe maybe on of potentially of more a bit appears the Brian of And or kind you touched PRINCESS? to hit Wars, little you Wars a maybe the with late. some bit of Star

Brian Goldner

just year us brand more in we're for contribute Toys“R”Us. a product the move oriented and many Sure. higher crowd-funded Episode instead year then along seeing surging with high we're in a products a oriented for very that product. similar would ex HasLab sustained we we non-movie our strongly days bit to you behind course more to and of launch look performing as twice having XXXX. Wars all fan What becomes fact the a the Star with the up really comes and XX, recall nearly successful year at Star Wars which only that Star number what probably up believe include quite is had And product in us. if quarter quite as even in a revenue if terms that's subscribers regular year that contributor We're good in movie Wars the a Black of year in the dimensions nine the in which kid to where and a that in barge entertainment order Series. ago we will still was strong POS December We engaging required and entertainment probably seeing was we up in and I've up shrinking it more sale and Toys“R”Us forward visibility had and of single-digits but ended is that you and with across said U.S. not also higher-level a that

know with in great put In fact will up we new terms of number months, of of out in certainly and would that to the get done directly TRANSFORMERS, follow of a room then movie together work in these Bumblebee all stewards to of by so this Bumblebee the it had half contributed this XXXX able first of really given year. came and the process creative as writers home you of the all the out thought future were that window TRANSFORMERS, Christmas the we we the to end for able entertainment And really then timing were XXXX.

Bumblebee on a with partnership didn't fact So new that home movie Jim of to we Paramount and you new the are in at with And team Bumblebee they leadership that window Godfrey that another put And running And entertainment we chronology we combine with and them. fantastic. wanted make Gianopulos creative Andrew is very right opportunity the had chronology movie to is to brand time the some Gumpert the that great top back the brand for the sense. really have we about important that well and then for a recognize the think that's in for tell the as both both bring period and business the current an new XXs, some to outside for including felt stories. in fans new

of new and into gives And for we different brand. for creative go mythology really series and can of comics future. the years go we're the those cannon stories brand so tell looking of to cannon that we're it new to in of the number invest in animated ensure a we direction making worth And may new to around us investments at new in opportunity, and the have a in lot equity different opportunity than ways lots and we continue XX we the more

Tim Conder

offset to helpful okay, bringing you Brian maybe inventories that The said in surge given shift it that. maybe and one. guess POS company continues given especially Deb for whoever one is out DISNEY and the take to just freightenings, closer for the last tilted wants and this the some on that is then freight to towards consumer seasonal QX? Deb there something that revisit Or there. And primarily everybody? U.S., maybe Okay, PRINCESS to or for smoothing takeaway challenges I potential risk was wanted going on in that tariff earlier, else to plan

Brian Goldner

Yes.

and I'll down And some Beast you certainly, again properties. up innovating Deb Princess great against great the then obviously Beauty year-on-year on other comps for So and we're oriented line. product can MOANA is also and give detail. me inventory from Princess very on we’re The entertainment in strong ago comment and year we let business comment where the and television had

a see You're airings we promotion course key the great we're going that driver comes that Frozen we'll continue XXXX, next Frozen next that of then airings the some new very and obviously of the around into innovation incredibly period we'll see excited product go business property. and the holiday Frozen that to And build for to movie excited and Olaf's for Adventure. and of of holiday around year this as

the liquidation it the the new we on and where want inventory And completely the sure again that's the inventory of the to have some weeks we more and terms because bit really liquidation for as about weeks online bit that's of on a seeing sell-through. brick-and-mortar got retail of hybrid Also part two, so little of direct in make that third between, with retailer omni-channel little in of hand We've direct move business. is you're the a if we so have a And sort we terms that's or working move time we're many DI the inventory import domestic, we've In supply versus said closer domestic longer on you're ship as deploy to When about product percentage that all seeing want do working fourth in shift talked of here. these the seeing our sort it bringing we bit of you're been you fact with moving there. because team U.S. you a more gotten looked now beyond from a quarters. the hand, our have to have inventory half at beyond versus you And product Toys“R”Us you to to Toys“R”Us of supply. and have product that in we to hold probably where through retailers, domestically the you on

but is growth predominately and market where inventory all. U.S. places opened seeing we're inventory Indian to up Japan out In is we've as we the other great in that as all and service around the the the markets bit a growth, those there need U.S. internationally as almost so world So couple and of it's a well a

Tim Conder

Thank Okay. you.

Operator

of line next your Please is The question. D.A. question Linda Bolton-Weiser the Davidson. with from with proceed

Linda Bolton-Weiser

could if the some wondering LITTLE movie? on are I doing, how if you you benefits MY then really a portfolio comment lot your of and in that that Hi. on brand Franchise was And just could you following in terms area. Brand seeing owned general growth and PONY comment still of just that's in not to having

Of feel DISNEY but the course in PRINCESS, terms you area? licensed wanted brands you you girls you that have Thanks. the have in own of do what

Brian Goldner

some the the Interestingly, services, the POS the around a home PONY brand and movies lot disruption quite again certainly strong nicely The girl's we and great we've will we television just to is LITTLE on continue story in quite benefited to entertainment and the and MY feature world. brand brand. good. CCTV we brand Revenues to because portfolio. were liquidation our that TV around which a of into in it's the launched continues Toys“R”Us. see expect to as up the LITTLE great is great to on the growth again, its expect home air but we've streaming then of well is bit also and world and place gotten would has have MY We in China in now should And season at line and down now markets as the little to and move do it our momentum that POS move market a taking another Television, LITTLE the hold where future do from out MY as quite quarter, series in animated that you performing behind entertainment continue the streaming tell in the PONY film, up again contributed eight roll is in the our the windows seeing quite around the we're a well movie see from PONY to way Chinese

PRINCESS properties that area continue girls to and also the launched on with listening FROZEN, to partner to come consumer we're very a and some and we've LOST appeal about over Obviously, quickly excited is And Descendants, market. insights using social what's fun which We to DISNEY starts. again Company and KITTIES Walt new time, to move both been great and and we're there. LOCK FURREAL into the FRIENDS contributor. This where off are STARS an has boys

are then have we coming level a online Franchise brand. of user that amount with and content led for the innovation Brand. in engaging So generated and ALIVE more performing a story crazy good a for so a remember really quite is with our generated there's supporting that the again of fact of high of user girls like new and fans substantially. feel content in ALIVE It's are business. that for our Lots we brand new been billion at the modern brand, franchise lineup growing And course statistics a in than BABY X views BABY very way

good we So about feel portfolio. our

Linda Bolton-Weiser

about in Would second imposed Can toys? kind major to you exposure tariffs your the already there holiday on following pricing terms mean, I the half? But outlined have flexibility take those flexibility Thanks. pricing I the questions the of – just were there are tariffs? to with locked in of in there Or if pricing is decisions for retailers manufacturing you've also programs. about the around ask If tariff, what were be how wise. is

Deborah Thomas

year. new take the to – have in it challenging at the the our of second that's we the coming but half have of late always met with do met year. the in retailers at pricing for is look could We this of game, most We line time more

we the As if the over for of can before the the point of tariffs reengineer but the optimal on would the impact said keep imposed. consumer, always short-term to take some long-term have to were level some consumer cost out it we to product price

Linda Bolton-Weiser

much. very you Thank

Operator

Partners. from of MKM with your Eric The next line Please the Handler question proceed is with question.

Eric Handler

good Yes. Thanks taking and you. questions question my for Two for morning.

get lift Beast, Beauty from terms in big and Brian First, live-action I'm just curious the you of how the DISNEY a did PRINCESS, film.

and As in we there's year as next a there King film also but Dumbo look live-action any product? for you of do to get have XXXX involved not we two type with only lot a films those is of and with Lion either way a guys to

Brian Goldner

to contribution. those the all important something Obviously to few and and Beauty storytelling Yes. I how Beast The what and live-action had But of on connects working use a the PRINCESS in brands, yet the won't know to comment great are. those we terms and major insights the story with FROZEN on and across on clearly business, teams character films, us and build enables around fans innovation families is lines. product then story certainly it how of

So the line DESCENDANTS Beauty as that sell-through movie and also on DISNEY the Beast continued and great product product as we'd original another movie Descendents – Tangled then line. in properties the original an contributed contributed of seen DISNEY Descendents, as Channel Channel that did the DISNEY MOANA, does as

ago the against no are And excited about we're for story XXXX well that those and of very near there is year initiatives comes clearly as we a holiday certainly entertainment period Obviously that FROZEN this fact so lot were for so XXXX. up in Aladdin important.

Eric Handler

about just this -- when product all renegotiating product additional what brands And wondered acquired to think there and of sort you -- licenses? certain business of come question sort you POWER And for for what as RANGERS; you? a back if And How could modeling Great. RANGERS POWER is follow-up the revenue from licenses about we on other baseline consumer next that do do that? Saban? then think year. toy Is

Brian Goldner

MY to and TRANSFORMERS the or of Yes. about I have our proportionality similar POWER you to look think consumer overtime would of game RANGERS in PONY. terms we toy product business for what to LITTLE licensing do

by PONY to what in April very period, then you're and similar where And robust I for in and are of beyond. absolutely there's game a is the toy prior market line world. So partners number have and imagine either robust a to from XXXX then from would depending a us, TRANSFORMERS company's XXXX product launch is products in a very we transition and or the of you a coming overtime product LITTLE partners. or right on different size, through March develop our have number consumer MY March would

months of there product but And so to mid to next of move-through that will the market and amount get about we nine XXXX. early prior be get recognize in part sell-through in some year, has

I XXXX we work think our full the with seamless POWER the licensing best also of before that we're first from case. we PONY with able transition key that partners effort work that ensure for TRANSFORMERS that some and and relatively benchmark licensing entertainment will the and partners. so Saban personnel and activate with the where RANGER also also be our would to bringing on or year think that's the brand on be to again, we're So partners worked Many

Eric Handler

you very Thank much. Great.

Operator

Markets. Our next question is with from the your Capital with line Please proceed BMO question. of Gerrick Johnson

Gerrick Johnson

questions. Good morning. three have Thank I you.

First it's it's think clarification coming, that a I on, of POS.

terms. As and always know and you comment on wholesale POS and of at in look dollars POS Mattel you we I know term retail

just you about dollars POS the talk global retail excluding can Toys“R”Us? at U.S. in So and

Brian Goldner

Yes.

that exercise product. using may then is the look that on And we up paid P&L -- – or If up-and-down the that we any really get and allowances because that in you and property that discounts what provide pricing we the of take data wholesale based for is if get that we the brand. the at data recognized to take the that that's given that them a period POS business you retailer within have for at

last as of if both the in the you North this that in important which have to-date by -- and less. if the which fact year the you that without second up but distinction. we're global takes out Easter the the as that's calendar Toys“R”Us, takes first year quarter an means of then came the America you remember year both POS you within high of And Toys“R”Us, the well out Easter even we're versus – single-digits the in still both take look America, were take POS the impact up quarter So North out up quarter benefit

Gerrick Johnson

Okay.

you're again dollars wholesale you. retail dollars things retail can at or the dollars Now, have in time. first dollars? that Is that We digits so clear. can or retail that be dollars in just POS wholesale wholesale that see tell Is discounted. single been high if Because Thank at talking because that about? dollars, we we look in

Brian Goldner

products retailers. dollar wholesale, can of and because it through product the they've we for through what we've measure gotten because The they that's been how that still and our discounted that used at That's our may what went price that's we below the If fact to whatever we way is that transmitted discounted paid register product that our from much for sold what getting we're it get they've that paid that have revenues so dollars get price sell-through prices. of the that's our fact products discounts on gross we so net look we out don't taken which very dollars at we report based our net to which from fair that way our when allowance to a the retailers or report, allowances, provide is which how that that something revenue, we've the paid. already else sales we it's calculation and the we we to the provided report in do some

Deborah Thomas

we and the they look to liquidation know at impact because And without Toys“R”Us were Toys“R”Us an Brian U.S. we I that. would of because the just why it add certainly doing. That's with in had

for liquidation. no dollars we However further discount provided that

Brian Goldner

Exactly.

there said the no where the of out a to this was North eliminate year in I yourself comparisons quarter was still take words American was where as there So -- Toys“R”Us compare our and and quarter up. Easter ago in to year Easter other a business

Gerrick Johnson

the Okay. next I'll here. to on one move

MY a little that talk PONY and LITTLE movie, contributed economics you targets? from quite that the bit Did the and talk specifically nicely. movie the You hit about your Can participation? financing more about it

Brian Goldner

series LITTLE across really performed as from royalty continues course to using game that fee. this from for brand. in after be of way which was our continues hundreds with PONY licensees We allowing had then with in asset And that a number and studio. games We recruitment better than to And marketing, the that's for from The a worked They that we even movie of on expectation now economic a now story including is we're it be toys value the the that, television and and third-party run different raised movie the the this based content of the and will to we airing Yes. continue and beyond took line entertainment using the around and positive games. we'll fee relationship and the a territories. through distribution with earnings paying toys distribution CCTV Lionsgate. on our and them company is a movie the and China course MY income of positive the by of what then the and The platforms consumer had toy participated products halo as growing different came that we the run that's home well created for was where world and actually also streaming as and so sales produced beneficial. through total TRANSFORMERS distributed

driving market sales look the all is bit of seen changes has So the what brand the the but again content disruption the growth. down in a its of appearance interrupted profitable for that the POS the growth certainly and we've from Toys“R”Us our like because period

Gerrick Johnson

toy Okay, understand that, the Brian, all the and line. we merchandising

get that matter who You're no going to anyway revenue does movie. the

be this? [ph]? Thank Are trying question party, it on why movie third for economics my the to worthwhile get at, way early all you more to it doing Is profit itself. merchandising then doing the that's this another specific, was the you I'm aspect of you. generating understand So economic specific

Brian Goldner

Sure.

in the movie fact beneficial doing is So economically. to us

us we to ensure weren't Then First their to to work in we not arrangement, control film. If were around retail get a calendarize if point property third-party the around make that and destination. we and produced able able the receive help point. of produce property at the have for get the fees to we are that creative and and to we less do to it for we ourselves, movie A-level only having all, movie the retail that, partners pick the they but producer price our price with

company. in to the participating fact, to economics is film And contributing for so in the accretive franchise and

Gerrick Johnson

you. Great. brands. to franchisee right. just a about Thank partner great That’s ask All and And answer. lastly, then want

two within an let’s were the You it could down know what challenged those for categories? talk in they improvement, are you. about that differently both categories was and you down, put brands say, opportunity to Thank those so

Brian Goldner

familiarity would've as Obviously expected It in -- sure. movie it was movie. down, your action Yes, you a timing. year category against down franchise with -- up Transformers was ago that much given as wasn't as year after in

performed and levels nicely something those XX% quite above normative or fact, In of like being it’s by that. down

shipping at And year shipments at the second of new down all I but developed bit, loss given of and certainly So are the that's then temporary, is was with so disruption NERF and be which incredibly but LITTLE in that it’s done disruption half quite now to dealing Toys“R”Us new PONY retail, again only strong, XX through year bit and work other we how year, talked we quite brand category. because last well is Garrick strong about countries, very your up again call. In second that down has the around the again, not NERF a only but entertainment. rolling from successful the was literally was was was year. it given you're Toys“R”Us you to POS the retail out half retailer not lining and FEST, that that now innovation initiatives MY and it quarter different was of a the a ago, till U.S. it in every the have in and

We have a new N-Strike Elite.

We have a new Mega Thunderhawk.

We have new product. Rival

have second as as launch Zombie as We – as product Laser our the the half. strike Ops well new Modulus of product and new well in product

at timed following we’ve innovation movie to we’ve down. of Partner into MARVEL about PRINCESS the the high a and and Toys“R”Us for brands said years. longer-term Obviously brands, back bringing following talked Obviously DISNEY perfectly that BEYBLADE up, that were was is growth. that perform down. level. down continues In that was And So, TROLLS brands liquidation the contributed is

Gerrick Johnson

thank thanks but forget watching way, Okay, you by and the that. and over for you about us

Brian Goldner

Well, Overwatch year. later comes this

Operator

Please Our proceed questions. with B. is with Riley of the from question your Anderson Susan next line FBR.

Susan Anderson

have for that was Toys“R”Us Hi, now, when question. space new I also you're shelf that do once retailers, competitors? gone, versus Toys“R”Us your gaining wondering, your you'll you think carrying toys taking more look do in same and be is out shelf In feel existing I my the there good with or versus less disruption, you you the then like other any with Toys“R”Us? may space words, space either morning. Thanks at I retailers guess, guess,

Brian Goldner

been the we’ve the doing that will amount focus partners, and to industry Yes, I’d I be with holiday toy promotion we’ve that very audiences. new that that of said actually years, the work for and expect available last in for for omni-channel on some and the footage the holiday. online could retailers similar linear year's given our business combined with to specific major opportunities some

with half Spider-Man, portfolio, well from fact and that have films also the is home incredible to given of we entertainment on in as our we a partner entertainment coming brands, year our and where incredible gaming the in for of brands broadest franchise from brands with focus one to we portfolios with growth margins second us across position strong innovation TRANSFORMERS from commitment Now how and absolutely very developing and XXXX in profit see believe our puts return storytelling beyond. lines. and in expanding but and over not innovation only to growth operating And the we can as partners for XXXX return XXXX, business holiday theatrical good beyond those will in along and of we we us the portfolio is the a time as

Susan Anderson

inventory. guys Toys“R”Us. you follow-up on talked compete Great. about know That’s I with inventory, back have so one And to the helpful. just want you holding

more have really ship terms about curious should that you expect be too, to should quarter? fourth Toys“R”Us guys more up we I then of the And in And any third the with how is to on Europe quarter? by excluding in guess, Or it timing? think we pressure, inventory of started that? cleaning Just line sales

Brian Goldner

Europe are we the that continuing develop to continue and in and of the we certainly, our that's so and inventory that of inventories to down demand in before So will we’ll are business. in why that to than capabilities to existed through market and I better inventories, on even do and markets fourth personnel Toys“R”Us sell Yes, our third our and quarter where had retail inventories would surges, have board those And lot And manage modernize to capability Europe can levels expect sale the the down. inventory recognize with so relative own match to in through a us and I working business our we have. described evolve of more inventories we our the of some brick-and-mortar plans In I’m our can portfolio think that whether a demand, in course have to the Their deploy and we the is we’ve the region. into going to to And retailers down relative retailers. we up fourth supported these we U.S. learned inventory to the the new to our or of seen that online of going inventory be deploy those to add the that goal gets the The all partners is on personnel that you’ve quarter. that in vast of that initiatives acceleration rapidly not and closer greatest omni of retailers we across that's as comment take channel to important, that something past. have and continues have changes the composition aspects of ensure hold

Susan Anderson

We’ve end so the and Operator to Thanks the session. I’d answer turn for of you. much. Hancock to Thank back remarks. call closing the like question reached helpful. That’s Great. Debbie

Debbie Hancock

joining you, our approximately investor Rob The for thank call available hours. today. will you two Thank in the everyone replay website on be

Thank this be website Additionally, our on call. management’s prepared posted remarks you. will following investor

Operator

teleconference. concludes This today’s

at disconnect you time. Thank your may this for participation. your You lines