By Connor Hart

Hasbro said shoppers were willing to pay higher prices for toys during the holiday season, allowing the company to pass along tariff costs without significantly hurting demand.

Chief Executive Chris Cocks said in an interview Tuesday the toymaker raised prices in the second half of last year, focusing on entertainment- and collectible-driven categories where demand tends to be more resilient. The company broadened those increases at the start of this year.

Hasbro's effective tariff rate on toys is currently around 24%, Cocks said. Toys could previously enter the country duty free prior to President Trump's second term. While the company and its retail partners have absorbed part of the impact, some costs ultimately must be passed on to consumers.

"That's just the reality of living in a world with tariffs," Cocks said.

Demand held up better than expected despite the higher prices, helping Hasbro swing to a fourth-quarter profit and post a 31% jump in revenue. Shares climbed 7.4% to $103.95 after the company projected another gain in sales for the coming year.

Higher-income households, which account for roughly 60% of discretionary spending in the U.S., remained largely price-insensitive, Cocks said. And while lower-income shoppers were more promotion-focused, they still prioritized holiday purchases. A more disciplined approach to discounting also helped lift gross margins, and the company ended the quarter with lean inventory.

Much of the quarter's outperformance came from Hasbro's Wizards of the Coast and digital-gaming segment, which benefited from expanded distribution, new-player growth and strong repeat purchasing from collectors.

For 2026, Hasbro expects revenue to be up 3% to 5% from last year, ahead of the 1.2% increase that analysts surveyed by FactSet expected. The company additionally guided for adjusted earnings before interest, taxes, depreciation and amortization--a metric which strips out exceptional and other one-off items--of $1.4 billion to $1.45 billion, and an adjusted operating margin of 24% to 25%.

Cocks said tariffs will represent a larger headwind this year than last, because the levies will be in place for the entire year, rather than only a part of it. Still, recent price increases have shown demand to be relatively resilient, and the company has mitigated and absorbed much of its tariff impact, he added.

Looking ahead, Cocks added that Hasbro will increasingly focus on gamified, entertainment-driven and collectible categories, rather than relying solely on the traditional toy aisle, which faces longer-term pressures from declining birth rates and digital competition.

For its three-months ended Dec. 28, Hasbro swung to a profit of $201.6 million, or $1.41 a share, compared with a loss of $34.3 million, or 25 cents a share, a year ago.

Stripping out certain one-time items, earnings were $1.51 a share. Analysts surveyed by FactSet expected adjusted earnings of 96 cents a share.

Revenue jumped 31% to $1.45 billion, topping the $1.26 billion that Wall Street modeled.

Write to Connor Hart at connor.hart@wsj.com

(END) Dow Jones Newswires

February 10, 2026 12:03 ET (17:03 GMT)

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