Hasbro, Inc.

1027 Newport Avenue
Pawtucket, Rhode Island 02862
U.S.A.
(401) 431-8697
Fax: (401) 431-8400

Public Company
Incorporated: 1926 as Hassenfeld Brothers Incorporated
Employees: 8,200
Sales: $1.41 billion
Stock Exchanges: American London

Truly successful toy companies do not just make toys; they manufacture popular culture. Hasbro, which is one of the two largest toymakers in the world, certainly fits that description. From America’s Action Hero to a plastic anthropomorphized potato to the most famous dog and the largest bird in the world, Hasbro toys are instantly recognized by millions of Americans. Hasbro makes G.I. Joe and Mr. Potato Head and owns licenses for the Peanuts and “Sesame Street” characters. Thanks to acquisitions, it also makes Playskool and Romper Room preschool toys, and owns boardgame-maker Milton Bradley.

Hasbro traces its origin to an enterprise founded in Providence, Rhode Island, in 1923 by Henry, Hilal, and Herman Hassenfeld, brothers who had emigrated to the United States from Poland. The Hassenfeld brothers engaged in the textile remnant business—selling cloth leftovers. By the mid-1920s they were using them to make hat liners and pencil-box covers. Soon, with eight employees—all family members—they began making the boxes themselves, after realizing their popularity. In 1926 the company incorporated under the name Hassenfeld Brothers Incorporated.

Hilal Hassenfeld became involved in other textile ventures, and Henry took control of the new company. Although a paternalistic employer, Henry Hassenfeld was also a tough and shrewd businessman. During the Great Depression—with 150 employees in 1929 and 200 employees in 1930—Hassenfeld Brothers commanded annual sales of $500,000 from sales of pencil boxes and cloth zipper pouches filled with school supplies. At that point, however, the company’s pencil supplier decided to raise its prices and sell its own boxes at prices lower than the Hassenfeld’s. Henry Hassenfeld responded with a vow to enter the pencil business himself, and in 1935 Hassenfeld Brothers began manufacturing pencils. This product line would provide the company with a steady source of revenue for the next 45 years.

During the late 1930s the Hassenfeld Brothers began to manufacture toys, an extension of the company’s line of school supplies. Initial offerings included medical sets for junior nurses and doctors and modeling clay. During World War II Henry’s younger son, Merrill Hassenfeld, acted on a customer’s suggestion to make and market a junior air-raid warden kit, which came complete with flashlights and toy gas masks.

By 1942, as demand for school supplies tapered off, the company had become primarily a toy company, although it continued its large, profitable pencil business. Hilal Hassenfeld died in 1943, at which point Henry Hassenfeld became CEO and his son, Merrill Hassenfeld, became president. Also during World War II, the company ventured into plastics, to support its toy-making, and was forced, due to labor shortages, to reduce employment to 75.

After the war Merrill Hassenfeld began marketing a girls make-up kit after seeing his four year-old daughter play with candy as though it were lipstick and rouge. In 1952, the company introduced its still-classic Mr. Potato Head, the first toy to be advertised on television. In 1954 Hassenfeld became a major licensee for Disney characters. By 1960, revenues hit $12 million, and Hassenfeld Brothers had become one of the largest private toy companies in the nation.

Henry Hassenfeld died in 1960. Merrill Hassenfeld then assumed full control of the parent company, while his older brother Harold Hassenfeld, continued to run the pencilmaking operations. Merrill Hassenfeld’s succession was logical given his interest and expertise in the toy business, but it also marked the beginning of an intramural rivalry between the two sides of the company; Harold Hassenfeld would come to resent the fact that the pencil business received a lower percentage of capital investment even though it was a steadier performer and accounted for a higher percentage of profits than toys.

In 1961 Hassenfeld Brothers (Canada) Ltd., now Hasbro Canada, was founded. Hassenfeld Brothers seemed to defy the vagaries of the toy business in the early 1960s, when it introduced what would become one of its most famous and successful product lines. According to author Marvin Kaye in A Toy is Born, the company conceived G.I. Joe in 1963 when a licensing agent suggested a merchandise tie-in with a television program about the U.S. Marine Corps called “The Lieutenant.” The company liked the idea of a military doll, but did not want to pin its fate on a TV show that might prove short lived; so it went ahead and created its own concept, and in 1964 Hassenfeld unleashed G.I. Joe, a foot-high “action figure” with articulated joints. In its first two years, G.I. Joe brought in between $35 and $40 million and accounted for nearly two-thirds of the company’s total sales.

The company changed its name to Hasbro Industries in 1968—it had sold its toys under the Hasbro trade name for some time—and went public. Only a small portion of Hasbro stock went on the open market, however; the majority stake remained in the hands of the Hassenfeld family. At the same time, Hasbro decided that it could no longer ignore the public’s growing disapproval of war toys, which was fueled by disillusionment with the Vietnam War. In 1969 G.I. Joe, still the company’s leading moneymaker, was repackaged in a less militaristic “adventure” motif, with a different range of accessories. Also in 1969, the company acquired Burt Claster Enterprises, the Baltimore, Maryland-based television production company responsible for the popular “Romper Room” show for preschoolers. Burt Claster Enterprises had also begun to manufacture a line of “Romper Room” toys. Nevertheless, a month-long Teamsters strike and troubles with Far Eastern suppliers hurt Hasbro in 1969, and the company posted a $1 million loss for the year.

The 1960s ended on a turbulent note for Hasbro, providing a foretaste of the decade to come. In 1970 Hasbro decided that it had to diversify, and it opened a chain of nursery schools franchised under the “Romper Room” name. The company hoped to take advantage of President Richard M. Nixon’s Family Assistance Plan, which subsidized day-care for working mothers. Running the preschools was a very big mistake. Merrill Hassenfeld’s son, Alan Hassenfeld, told The Wall Street Journal, December 13, 1984, “We’d get phone calls saying, ‘We can’t find one of the kids.’ The whole company would stop.” Within five years Hasbro had left the day-care business. Another ill-fated diversification move was Hasbro’s line of Galloping Gourmet cookware, which sought to capitalize on a contemporary television cooking show of the same name. That venture literally fell apart when termites ate salad bowls stacked in a warehouse.

In addition, two products from Hasbro’s 1970 line turned into public relations disasters: Javelin Darts were declared unsafe by the government, and Hypo-Squirt, a water gun shaped like a hypodermic needle, was dubbed by the press a “junior junkie” kit. Both products were promptly removed from the market. The continuing success of “Romper Room” and its related toy line proved to be a bright spot for Hasbro, although the company came under fire from the citizens’ group Action for Children’s Television because the program was used as an advertising vehicle for toys.

In 1974 Merrill Hassenfeld became CEO and his son, Stephen D. Hassenfeld became president of Hasbro. Hasbro regained its profitability but floundered once again later in the decade. Poor cash flow accounted for some of the problem, but the company’s underlying mistake was casting its net too far and too wide in an effort to compensate for G.I. Joe’s declining popularity. Hasbro discontinued G.I. Joe in 1975 because of the rising price of plastic, which was caused by rising crude oil prices. By 1977—the year Hasbro acquired Peanuts characters licensing rights—the company suffered $2.5 million in losses and carried a heavy debt. The financial situation became serious enough that Hasbro’s bankers forced it to suspend divident payments in early 1979. The toy division’s poor performance fueled Harold Hassenfeld’s resentment that the Empire Pencil subsidiary continued to receive a smaller proportion of capital spending to profits than did the toy division. The dam threatened to burst in 1979, when Merrill Hassenfeld died at age 61. Stephen Hassenfeld was chairman Harold Hassenfeld’s heir apparent, but Harold Hassenfeld refused to recognize Stephen Hassenfeld’s authority.

The feud was resolved in 1980, when Hasbro spun off Empire Pencil, which had become the nation’s largest pencil maker, and Harold exchanged his Hasbro shares for shares of the new company. At the same time, Stephen Hassenfeld became the toy company’s CEO and chairman of the board, dedicated himself to turning Hasbro around. Where it had once been overextended, the company slashed its product line by one-third between 1978 and 1981, and its annual number of new products was cut by one-half. Hasbro also refocused on simpler toys, like Mr. Potato Head—products that were inexpensive to make, could be sold at lower prices, and had longer life cycles. This conservative philosophy prevented Hasbro from entering the hot new field of electronic games, as did the fact that it could not spare the cash to develop such toys. The decision to stay out of the market was vindicated in the early 1980s, when the electronics boom turned bust and shook out many competitors.

Perhaps the most important symbolic event in Hasbro’s revival was the 1982 return of G.I. Joe. The U.S. political climate made military toys socially acceptable again, and G.I. Joe was reintroduced as an antiterrorist commando, complete with a cast of comrades and exotic villains, whose personalities were sculpted with the help of Marvel Comics. Two years later, Hasbro introduced its highly successful Transformers line—toy vehicles and guns that can be reconfigured into toy robots. Transformers were tied into a children’s animated TV series and proved so popular that People asked Stephen Hassenfeld to pose with them for its cover.

In 1983 Hasbro acquired GLENCO Infant Items, a manufacturer of infant products and the world’s largest bib producer. Hasbro also sold about 37% of its own stock to Warner Communications in exchange for cash and Warner’s struggling Knickerbocker Toy Company subsidiary, which made Raggedy Ann and Raggedy Andy dolls. The new Warner holdings did not threaten the company’s autonomy, however; the shares were put into a voting trust controlled by the Hassenfeld brothers and other Hasbro executives. In 1984 Stephen Hassenfeld, remaining CEO and chairman, retired as president and was succeeded by his brother, Alan.

In the early 1980s Hasbro was the nation’s sixth-best-selling toymaker, with revenues of $225.4 million and $15.2 million in profit. Flushed with its newfound strength, in 1984 it acquired Milton Bradley, the nation’s fifth-best-selling toymaker, and second only to General Mills’s Parker Brothers subsidiary in production of boardgames and puzzles. Milton Bradley had been founded by its namesake, a Springfield, Massachusetts, lithographer who set up shop in 1860 and immediately turned out a popular reproduction of a portrait of presidential candidate Abraham Lincoln. Bradley’s portrait, however, showed Lincoln clean-shaven, so when Lincoln grew his beard, sales fell off. Looking for a way to stay in business, Bradley invented and produced a boardgame called The Checkered Game of Life, a distant precursor of a popular Milton Bradley game, The Game of Life, which was introduced in 1960. The game’s success convinced Bradley to stay in the game business. During the Civil War he produced a lightweight packet of boardgames for the amusement of Union troops. The company had incorporated in 1882.

During the late 19th century, Milton Bradley (MB) relied mostly on favorites like chess and checkers and traditional European games. During the 20th century, however, the company designed and marketed more original games, sometimes with great success. During the Depression, a Milton Bradley financial game called Easy Money became popular. In the 1950s, Milton Bradley pioneered games with tie-ins to television shows—Concentration was an early favorite. In 1968 MB acquired Chicago-based Playskool Manufacturing, which was noted for its preschool toys. Among Milton Bradley’s later successes was the “body action” classic Twister, which was published in 1971 and became a popular prop with talkshow hosts for a while after Johnny Carson challenged Eva Gabor to a go-around on “The Tonight Show.”

In 1984, however, Milton Bradley had found itself in an uncertain financial position after fending off a hostile takeover from British conglomerate Hanson Trust. In the wake of that failed bid, several unidentified parties bought up large blocks of MB stock, fueling speculation that another takeover attempt was imminent. Finally, in May 1984, MB agreed to be acquired by Hasbro for $360 million. MB’s strength in boardgames and puzzles complemented Hasbro’s plastic toys and stuffed animals. Milton Bradley’s Playskool subsidiary provided a solid preschool line including classics like Lincoln Logs and ABC blocks. The new Hasbro Bradley Incorporated immediately challenged Mattel’s position as the nation’s leading toymaker. In 1985 Hasbro Bradley became Hasbro, Inc.

If Hasbro’s and Milton Bradley’s product lines merged well, their chief executives did not. Stephen Hassenfeld remained president and CEO of Hasbro Bradley, with Milton Bradley chief James Shea Jr. becoming chairman. After only a few months, however, Shea resigned. Stephen himself became chairman, with brother Alan Hassenfeld replacing him as president.

Hasbro surpassed Mattel to become the largest toy company in the world in the mid-1980s. Having done so, it then attempted to dethrone Mattel’s Barbie, queen of the fashion doll market. In 1986 Hasbro introduced Jem, a record producer who was also, secretly, a purple-haired rock musician. Jem posted strong initial sales, then failed. Hasbro retired Jem the next year. In 1988 the company brought out Maxie, a blonde doll which was made the same size as Barbie so that Barbie accessories could fit it. Maxie lasted twice as long as Jem; it was discontinued in 1990.

In 1989 Hasbro acquired bankrupt rival Coleco Industries for $85 million, just four years after a Toy and Hobby World survey declared that Transformers had passed Coleco’s Cabbage Patch Kids as the best-selling toy in the United States. In addition to the dolls, which had fallen from their peak of popularity during the 1985 Christmas season, Coleco also owned the rights to the classic boardgames Scrabble and Parchesi. The Coleco acquisition proved to be Stephen Hassenfeld’s final triumph, however. In 1989, he died at age 47. Forty-one-year-old Alan Hassenfeld became chairman and CEO.

Alan Hassenfeld has worked for the family business for virtually all of his adult life and had maintained a close working relationship with his brother. While it is Alan’s task to keep Hasbro at the top of its industry, it was Stephen who brought it there, converting the relatively modest toy company that their grandfather had founded into a juggernaut.

Principal Subsidiaries

Claster Television, Inc.; Hasbro Promotions and Direct, Inc.; Hasbro Foreign Sales Corp. (U.S. Virgin Islands); Hasbro Managerial Services, Inc.; Milton Bradley Company; Playskool Baby, Inc.

Further Reading

Kaye, Marvin, A Toy is Born, New York, Stein and Day, 1973; “Hasbro, Inc.: Company History,” Hasbro corporate typescript, 1990.

—Douglas Sun