PAWTUCKET, R.I. — Weakness in its boys and preschool categories globally and the stronger dollar pushed toy maker Hasbro Inc.’s third-quarter net income down by 4 percent.
But the Pawtucket, R.I.-based company’s adjusted results topped Wall Street’s forecasts on Monday, and it remains confident heading into the critical holiday season, which is when toy makers can earn up to 40 percent of annual revenue.
Chief Financial Officer Deborah Thomas said Hasbro was entering the holiday season with hot toys including its Marvel line and said the company plans to boost toy sales “with a significant increase in marketing support in an environment of significantly lower U.S. retail inventory.” Retailers have been cautious on over-ordering toys this year and are also buying toys closer to when they are needed.
The report followed larger rival Mattel Inc.’s more upbeat third-quarter results last week. The company said its net income rose 22 percent, helped by strong sales of its Monster High Dolls and Fisher Price toys.
For the three months ended Sept. 30, Hasbro Inc. earned $164.9 million, or $1.24 per share. That compares with $171 million, or $1.27 per share, a year earlier.
Removing the impact of the stronger dollar, earnings were $1.28 per share. A reduction in the number of outstanding shares through repurchases helped boost earnings per share by about 2 cents.
Analysts, on average, expected profit of $1.20 per share, according to FactSet.
Revenue slipped 2 percent to $1.35 billion from $1.38 billion. Revenue totaled $1.39 billion excluding unfavorable foreign exchange rates. Wall Street forecast $1.38 billion, on average.
Revenue in the U.S. and Canada edged up 1 percent, helped by solid sales of girls’ products and games. This was somewhat offset by weaker sales of preschool toys and boys’ products. Overseas revenue fell 7 percent, hurt by the stronger dollar. When the dollar is strong, international sales translate into fewer dollars back at home.
Revenue for the entertainment and licensing segment declined 7 percent, dragged down by lower movie-related revenue.
The strongest product category for the quarter was girls’ products, with revenue up 17 percent. Sales were helped by the launches of the latest Furby robotic pets and One Direction boy band dolls. New products available for the holiday season — including interactive doll Baby Alive Baby Wanna Walk, animatronic animals Furreal Friends Baby Butterscotch and Bouncy My Happy to See Me Pup also posted strong results in the period. Well-known brands including My Little Pony and Easy-Bake also did well.
The softest category was boys, which was hurt by expected drop-offs in sales of Transformers and Beyblade, a spinning top game.
Sales in Hasbro’s games category were flat. The company, which owns well known games such as Scrabble and Monopoly, has been working to turn around results in this category as more people turn to electronic games. It is launching board games based on smartphone games such as Angry Birds and Farmville, in an effort to improve results.
Hasbro said that it still expects its full-year earnings per share and revenue to climb, when stripping out the impact of foreign exchange rates.Copyright © 2013 Paddock Publications, Inc. All rights reserved.