* Sales of games, girls' toys rise more than expected
* Second-quarter profit, sales miss estimates
* Boys segment revenue falls
* Digital makeover for some classic brands
(Recasts with details of game sales, adds analyst comments,
industry background, closing share price)
By Dhanya Skariachan
July 22 Sales of Hasbro Inc games,
including "Monopoly" and "Magic: The Gathering," jumped 19
percent in the second quarter, suggesting the No. 2 toymaker may
be shoring up a weak area that could help offset a steady
decline in demand for action figures.
The stronger-than-expected showing for its games business
boosted Hasbro shares on Monday and helped offset a sharp
decline in sales of toys aimed specifically at boys.
Notably, Hasbro's Beyblade spinning-top toys and playthings
themed on Marvel comic characters fizzled during the quarter.
"They experienced double-digit growth in Games, which has
been the perennial weak area," Needham analyst Sean McGowan
said. "Overall, the report was a lot stronger than expected,
despite the weakness in Boys."
Hasbro has sought to broaden the appeal of its classic
brands like Twister, Monopoly and Jenga by giving them a digital
makeover. It has also been investing in its mobile gaming
business as children gravitate to games played on Apple Inc's
iPad and other devices.
Hasbro recently bought 70 percent of Backflip Studios, a
mobile game studio. It also signed a separate agreement with
Electronic Arts Inc to make mobile games.
In the seasonally weak second quarter, Hasbro's net profit
fell to $36.5 million, or 28 cents a share, from $43.4 million
or 33 cents a share a year ago. Excluding a pension charge, it
earned 29 cents a share, missing the analysts' average estimate
of 34 cents, according to Thomson Reuters I/B/E/S.
Also on Monday, Hasbro said it had expanded its partnership
with Walt Disney Co, obtaining the rights to make toys
and games for Marvel characters such as Spider-Man, the Avengers
and Iron Man through 2020. Hasbro's rights for the "Star Wars"
franchise, which Disney bought recently, also run through 2020.
Hasbro shares ended 3.3 percent higher at $46.87 on the
Nasdaq on Monday.
WEAK DEMAND FOR BOYS' TOYS
Overall sales in the second quarter fell 6 percent to $766.3
million, while analysts expected $794.7 million.
The second-largest U.S. toymaker, home to G.I. Joe, Nerf and
Mr. Potato Head, said revenue in its boys' toy business fell 35
percent to $253.7 million in the second quarter, making it the
fifth straight quarter of declines at the unit.
Unlike the second quarter of 2012, Hasbro this year had
fewer movie franchises supporting its toys modeled on Marvel
characters such as Spider-Man and the Avengers.
Also, its traditional action figures and other toys are
competing for boys' attention with electronics, iPads and mobile
devices, MKM Partners analyst Eric Handler said.
"Girls still have very much of a nurturing element and still
play with dolls. Boys are gravitating toward electronics at an
earlier age now," Handler said.
Revenue for the girls unit rose 43 percent in the quarter,
topping analysts' expectations.
Last week, larger rival Mattel Inc posted a much
weaker than expected profit on sluggish Barbie doll sales
, and smaller toymaker Jakks Pacific Inc
slashed its full-year forecast, saying several retailers in the
United States and Europe had cut orders for its key products.
Mattel boosted its share of the international toy market by
6.3 percent from 2008 to 2012, while Hasbro lost its share by
4.7 percent, according to data from Euromonitor International.
(Reporting by Dhanya Skariachan in New York; editing by Alden
Bentley, Jeffrey Benkoe, John Wallace and Matthew Lewis)