Dive Brief:
- Hasbro’s ongoing supply chain reconfiguration has been a major driver of its ability to trim costs this year, CFO and COO Gina Goetter said on an Oct. 24 earnings call.
- About 60% of the company’s roughly $177 million in net cost savings through the first nine months of 2024 have come from efforts to reduce inventory and improve productivity, among other initiatives.
- Goetter said Hasbro is on pace to realize up to $250 million in net cost savings overall this year, with the company seeking $750 million in gross cost savings through the end of 2025.
Dive Insight:
One of the key pillars of Hasbro’s supply chain transformation is its lean inventory strategy. The company has touted its ability to bring down aged inventory for multiple quarters, continuing the trend in Q3.
Hasbro reported owned inventory was down 39% year over year in Q3, including a 40% YoY decline in consumer products inventory. Goetter said those Q3 inventory levels represented multi-year lows, echoing a similar statement made following Q2.
“Staying disciplined with our inventory across all our businesses is the right long-term decision for the company, but it also heightens the importance of accurate demand forecasting and supply chain agility,” Goetter said.
The CFO also said that the decision to tighten supply has led to a large drop in closeout volume and continued gross margin benefits. While this came at the expense of consumer products revenue, Hasbro kept operating profit within the segment "essentially flat" in Q3, according to Goetter.
“This highlights the significant progress we have already made in our turnaround and is a testament to our supply chain transformation and discipline on inventory and cost management,” Goetter said.
Beyond inventory management, Hasbro, which promoted Stephanie Beal to chief supply chain officer in July, is also pushing to boost collaboration between cross-functional teams. More specifically, Goetter said the company is further integrating its design team with its supply chain and product development teams in Asia to improve speed to market.
“By bringing the design process closer to the source, we can bring products to market faster and allocate resources more efficiently across our portfolio,” Goetter said.
