Hasbro profit up on Playskool, Transformers

By Justin Grant

NEW YORK (Reuters) - Toy maker Hasbro Inc (HAS.N) posted a 62 percent rise in quarterly profit on Monday, helped by sales of its Playskool brand and strong demand for products tied to the "Transformers" movie.

The maker of Nerf balls and Monopoly board games said third-quarter earnings rose to $161.6 million, or 95 cents a share, from $99.6 million, or 58 cents, a year earlier.

Excluding a gain from a tax adjustment, profit was 78 cents a share for the No. 2 U.S. toy company. Analysts' average forecast was 71 cents, according to Reuters Estimates.

Despite the results, Hasbro's shares fell over concerns about how it will drive sales next year, Needham & Co analyst Sean McGowan said.

"The concern is and probably is going to be, 'What are you going to do for me next year?" McGowan told Reuters. "It's not reasonable to expect that a company is going to have as much success as they've had this year."

The results came a week after industry leader Mattel Inc (MAT.N) posted slightly lower quarterly profit because of costs and disruptions from recent recalls of potentially dangerous toys.

Heading into the holiday season -- toy makers' most important time of year -- Hasbro Chief Executive Alfred Verrecchia said he was more concerned with the challenging overall retail environment than recalls' potential impact on sales.

"Every year at this time retailers and manufacturers get anxious about the holiday season," Verrecchia said on a conference call. "I would be more concerned about the price of oil and things of that nature."

The toy industry rings up nearly half its annual sales during the fourth quarter, which includes the holiday shopping period, according to market research firm NPD Group.

This season may be the worst in the last five years, NPD has said.

TOY STORY

More than 20 million toys have been recalled in the last four months due to potentially dangerous levels of lead paint and hazards posed by small magnets that can become dislodged.

RC2 Corp's (RCRC.O) wooden Thomas & Friends toy trains and Mattel's Polly Pocket dolls and products based on popular characters from "Sesame Street" and "Dora the Explorer" were among the many pulled from shelves worldwide.

Hasbro -- which recalled nearly 1 million Easy-Bake Ovens earlier this year -- has been able to avoid the lead-related stumbles of its rivals because of an already aggressive testing process, McGowan said.

Hasbro "has had in place all along more rigorous, more frequent, more random tests and would have caught these things at an earlier stage than a lot of other companies," McGowan said.