Soft game sales weigh on Hasbro’s 2Q earnings
PAWTUCKET, R.I. — Toy maker Hasbro Inc. says its second-quarter net income dropped 25 percent on the stronger dollar and weak game sales. But its earnings still beat analysts’ expectations.
A shift in consumer spending from board games to smartphones and tablets has been hurting the maker of Scrabble, Monopoly and other classic games. Its revenue fell 11 percent in the latest quarter, missing Wall Street expectations.
The second quarter is a seasonally small one for toy makers, which make up the bulk of their sales during the second half of the year and the holiday season. But the results can indicate how willing Americans are to spend on non-essential items.
Hasbro, whose toys include Transformers and My Little Pony, reported Monday that its net income fell to $43.4 million, or 33 cents per share, for the period ended July 1. That’s down from $58.1 million, or 42 cents per share, a year ago.
Analysts expected earnings of 24 cents per share, according to a FactSet survey.
Its shares rose 16 cents to $34 in premarket trading.
The prior-year period’s results benefited from a favorable tax adjustment of 15 cents per share, which was partially offset by a charge of 6 cents per share tied to costs associated with creating the Gaming Center of Excellence.
Revenue for the Pawtucket, R.I., company declined to $811.5 million from $908.5 million. The latest revenue figure missed Wall Street’s estimate of $832 million.
Revenue for the U.S. and Canada fell 19 percent, while international revenue slipped 4 percent. Taking out the impact of the stronger dollar, international revenue gained 5 percent.
Hasbro said results were strong in Latin America, but offset by softness in Europe and the Asia Pacific region.
President and CEO Brian Goldner said in a statement that the toy maker expects its full-year earnings per share and revenue will increase, when excluding the stronger dollar’s impact.
Revenue for the entertainment and licensing unit surged 59 percent to $43.2 million thanks to the sale of television programs like My Little Pony in both the U.S. and abroad.
In the games segment, revenue fell 8 percent. Preschool division revenue climbed 6 percent, driven by sales of Sesame Street products and those in the Playskool Heroes product line such as Marvel and Transformers Rescue Bots products.
Revenue for the boys’ category dropped 16 percent, while revenue for the girls’ division declined 13 percent.
Hasbro said some girls’ toys that will be available this holiday season include Baby Butterscotch from Furreal Friends and Baby Wanna Walk from Baby Alive.
Last week Hasbro’s rival, Mattel Inc. said that its second-quarter net income rose 20 percent on lower costs and strength in its Barbie and American Girl dolls.