Hasbro Wins Despite Slower Toy Sales

PAWTUCKET, R.I. ( TheStreet) -- Hasbro ( HAS) booked slower quarterly earnings and revenue but profits topped expectations, thanks in part to international sales and cost controls.

Hasbro's net earnings fell 15.4 % to $140 million, or 99 cents per share, down from $165.6 million, or $1.09 per share, in the year-earlier quarter.

Hasbro's net revenue declined 7.2% in the recent quarter to $1.28 billion, attributed in part to a $23.5 million negative impact from foreign exchange.

Hasbro's bottom-line results topped expectation for earnings of $133 million, or 92 cents per share, leading Hasbro shares to bid 1.5% higher Monday morning to $45.49 despite softer year-over-year results.

The toymaker recently pre-warned investors that it would book slower sales in the end-of-year shopping season. The cautionary statement was attributed to relative weakness in U.S. and Canadian markets, despite strength in emerging international markets.

Rival and toy-making industry leader Mattel ( MAT) beat fourth-quarter expectations and increased its dividend by 10.8%.

Mattel said improved sales in its core toy brands -- Barbie, Hot Wheels, Fisher-Price and American Girl -- helped drive the quarter's results.

Hasbro saw a 15% drop in its key action figure segment, as well as in games and puzzles. Hasbro said its games and puzzles segment reported a 22% decline last quarter, and sales in its boys segment fell 1%. Girls' toys and preschool toys saw improved demand.

Sterne Agee analysts expected Hasbro's first-quarter results to be soft, reflecting unfavorable timing issues in the entertainment industry, circumstances which should benefit the toymaker in its fiscal-second quarter.

The equity research firm lowered its full-year earnings expectations for 2011 and 2012 to $3.12 per share and $3.70 per share, down from $3.16 per share and $3.75 per share, respectively.

Even so, the 2011 entertainment line-up is expected to be promising, which should lead to growth and better margins. Sterne Agee maintained a buy rating and $56 price target on Hasbro shares.

The maker of Nerf foam toys, Monopoly board games and G.I. Joe action figures will sell toys and games based on Sesame Street characters Elmo and Cookie Monster this year. Toys based on motion picture Transformers: Dark of the Moon should also help boost sales this fiscal year, along with further expansion in emerging markets and the innovation with its The Hub television network.

The Hub is a multi-platform joint venture with Discovery Communications ( DISCA), launched on Oct. 10, 2010.

Hasbro said international sales rose 12% in the recent quarter.

The toymaker's 2011 outlook included higher sales and profits as recent investments begin to pay off.

Leapfrog Enterprises ( LF) also warned of slower sales at the end of 2010, ahead of its report on Feb. 10.

The company lowered its sales guidance, saying it should book a revenue increase of 13% to 14% year-over-year, lower than its prior guidance for growth of 15% to 20%, citing softer demand for its toys late in the holiday shopping season as adverse weather kept shoppers home. LeapFrog also said sales of interactive reading products slowed last quarter.

LeapFrog also lowered its earnings guidance, saying EPS should come in between 3 and 6 cents per share, down from its prior view of 20 cents to 30 cents per share.

Mattel shares rose 0.5% Monday morning to $25.38 while LeapFrog gained 3% to $4.14.

-- Written by Miriam Marcus Reimer in New York.

>To contact the writer of this article, click here: Miriam Reimer.

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