To Transform A Toymaker
Originally printed in Newsweek, December 17, 1984. Photo caption read, "Hits from Hasbro Bradley's hot line: Making fat profits by sticking to the basics"
When Katherine Van Hart dropped into the Bradlees department store in Fairfax City, Va., recently to pick up a set of duck-shaped bookends, she had no idea she was going to end up in the hospital. But Van Hart failed to reckon with a frenzied band of 100 shoppers determined to snatch up Bradlees' limited supply of one of this year's hottest Christmas toys: Transformers. When the store opened, she sauntered leisurely toward the bookend department. But "the next thing I knew I was on the ground and people were running over me," she recalled after being treated for a sprained ankle at a nearby hospital. "I thought for sure I was going to get killed."
Transformers--metal cars, planes, guns and other toys that convert to robots and sell for a minimum of $3--have proved extremely healthy for Rhode Island-based Hasbro Bradley Inc., however, securing the company's position as the hottest outfit in the toy business. Hasbro toy sales have nearly quintupled to an estimated $480 million since 1980--and the company has added another $400 million with its acquisition of Milton Bradley earlier this year. As an added Christmas dividend, Hasbro stock now sells for nearly $60 a share, compared with a 1984 low of $23.
Hasbro has scored by sticking to the basics. Chairman Stephen D. Hassenfeld, 42-year-old grandson of the firm's founder, recalls the 1979 Toy Manufacturers Association Toy Fair: it featured 600 electronic products--not one of them manufactured by Hasbro. "It was a year in which the financial community looked at us and said 'The industry has passed you by'," Hassenfeld says. "And it was also the year that the electronics thing began to fall apart. Everybody devoted so much of their financial and human resources to by going down that [electronic] path, they left a hole open for us in the basic business that you could have driven a truck through." While a number of major makers were running aground with electronic toys, Hasbro consistently increased its profits with conventional products like the GI Joe toys, Raggedy Ann and Andy dolls and stuffed animals based on Disney, Peanuts and Muppets characters.
New Talent: Along the way, Hassenfeld also strengthened Hasbro management by hiring toy-industry luminaries such as former Mattel executives Raymond Wagner and Bernard Loomis, the man who gave the world Strawberry Shortcake dolls. The executive acquisitions began to influence the way others in business perceived Hasbro. "Key people in the industry looking for new opportunities began to really want to make this place their home," Hassenfeld says. "All these people started coming to us more often and with better ideas because we were producing in the marketplace."
The best idea by far is the Transformer line, which Hassenfeld says is setting sales records for a first-year product. In fact, the only potential problem facing Hasbro is whether it can carry the added weight of Milton Bradley, which lost $18 million last year--primarily because it decided to take a fling in the disastrous video-game market. But Hassenfeld is confident his company can stay on top even if the spectacular growth of the past few years cannot be maintained. Hasbro is certainly building the financial muscle it will need: Wall Street analysts expect it to earn $48 million this year--more than triple its 1983 profits.
Written by Sylvester Monroe, Pawtucket, R.I.
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