Stephen Hassenfeld: Guided Hasbro Into the Big Time
NEW YORK (AP) _ Stephen Hassenfeld, the 44-year-old chairman and chief executive officer of Hasbro Inc., achieved a remarkable feat last year: He took his company to the top, making it the nation’s No. 1 toy maker.
But the third generation of the Hassenfeld family to lead the company says the real difficulties could lie ahead.
″I can’t say you’re challenged running a business on the upside. You’re challenged when it peaks and it begins to slide away from you,″ Hassenfeld said.
Hasbro, short for Hassenfeld Brothers, was founded by brothers Henry, Hillel and Herman in 1923 in Providence, R.I. The company at first sold textile remnants, then began manufacturing pencil boxes and school supplies.
Henry’s son Merrill, who was named president in 1943, took the company into toys.
Stephen, who is Merrill’s son and assumed the chairmanship in 1980, led the company into the big time.
Consider the numbers:
Hasbro entered the 1980s with just under $100 million in yearly revenue; since then it has grown twelvefold. Its 1980 profit of $4.6 million has multiplied by more than 21.
In 1985, the company’s profit soared 89 percent to $98.97 million on a revenue jump of 71 percent to $1.23 billion.
That revenue surpassed now-No. 2 Mattel Inc.’s revenue of $1.05 billion last year.
Still, Hassenfeld doesn’t seem obssessed with having attained, and keeping, the highest rank.
His passion, instead, has been to create ″balance,″ a favorite word of his that comes up over and over again in conversation.
″The toy industry has had a reputation, and in some ways deserved, for being a business that you could never quite predict. There wasn’t the consistency one year to the next,″ Hassenfeld said.
″I basically said, I’ve had a lot of exercise, but if we build something substantial, is it something I want to do for 30 years?
″If only I can bring balance to it.
″Ours is a portfolio of toy ideas. We need to be balanced, to make sure we don’t have too much in one segment. That we be balanced in price points; not just ideas that have been proved over time and not just fresh ideas.″
Hassenfeld speaks as if he is trying to persuade. His voice is slighlty nasal, his eyebrows rise to peaks behind his horn-rims.
To achieve this coveted balance, Hasbro dropped some traditional toys, such as gum-ball banks and doctor and nurse sets. It deliberately did not enter certain areas, such as the video games, which were a huge, but short-lived success. It became more selective about producing licensed toys, which also tend to have short life spans.
The company developed new, highly successful products such as the Transformers, its best seller last year, and My Little Pony. It brought back G.I. Joe, which is hot again.
It also acquired companies to gain entries into new segments. Its major purchase was Milton Bradley Co., the games and puzzle maker, for $360 million in 1984. Another was Knickerbocker Toy Co., a maker of plush toys, for $6.3 million in 1983.
The overall strategy worked, say toy industry analysts, who are highly enthusiastic about Hasbro, and Hassenfeld.
″Hasbro is where every other toy company in America aspires to be as far as the diversity of its product line,″ said Paul Valentine, a toy analyst wtih Standard & Poor’s Corp.
Hassenfeld, himself, cites this evidence of his success:
The company, which is now based in Pawtucket, R.I., sold $280 million worth of Transformers last year. Those sales will fall to $180 million this year, Hassenfeld predicts, with strange, small delight.
″I wanted to prove to everyone you can lose volume on a substantial category and still grow your business,″ Hassenfeld said. ″We can deal with a megabrand.″
He uses G.I. Joe as another example.
The company reintroduced the toy in 1982 after a four-year haitus, and that year it sold $52 million worth, representing 40 percent of the company’s volume. Last year it sold a whopping $150 million worth, but the toy represented just 12.5 percent of overall volume, Hassenfeld said.
G.I. Joes and Transformers will press each other for best selling status at Hasbro in 1986, he said.
Overall revenue will increase 12 percent this year, Hassenfeld predicts. The comany declines to project profit. Thomas Kully, an analyst with William Blair & Co. in Chicago, is forecasting a 15.5 percent profit gain, while Valentine expects a more modest 8.5 percent increase.
This year’s major Habro toy entries are Jem, a punk Barbie-like doll, and Inhumanoids, boy’s action figures that come from the center of the earth. And the company recently unveiled Bingo, an interactive electronic teddy bear, making Hasbro the first major toy maker to jump into a category that analysts consider highly promising.
Hassenfeld says he fosters good ideas at his company this way: ″There are no absolutes. I like to think we have more guidelines than policy. If I say no today and they really are keen on it they know they can come back at another time.″
But in the future, it will be very hard for Hasbro to match its already- attained success.
Paul Rothman, a toy analyst with Advest Group Inc. in Hartford, Conn., notes: ″They can’t keep up the fantastic growth. They were growing off a small base before.″
Still Valentine, citing the company’s new electronic toy, said, ″They are really aggressively competing in the industry and not resting on their laurels.″
Hassenfeld said: ″I think what we have learned is how to market to children.
″I think there are some opportunities that in time will make us a more broadly based children’s marketer. Maybe we’ll do something that is obvious, maybe we won’t do the obvious.″
Or, ″We could just be in the toy business in three years from now. It wouldn’t be the worst thing in the world,″ Hassenfeld said.
Hassenfeld, who made $1.14 million last year, said he had always known he would work in the family business, although he did consider a career in diplomacy. He majored in political science at Johns Hopkins University.
The immediate Hassenfeld family controls about 15 percent of the company’s stock, which is listed on the American Stock Exchange.
Hassenfeld joined the company in 1964, and held various posts until he became president in 1974. After his father died in 1979, he became chairman.
When his younger brother, Alan, became president and chief operating officer in 1984, Hassenfeld became chief executive.
Hassenfeld has homes in Bristol, R.I., New York City and Palm Beach, Fla., but he says he is on the road more than 50 percent of the time.
An eclectic art collector, he says he enjoys the theater and ballet. He also plays tennis, sails and skis.