April 19, 2010 / 11:00 AM / 9 years ago

UPDATE 3-Hasbro tops Street on strong sales of girls' toys

* Q1 EPS $0.26 vs Street view $0.16

* Sales rose 8.2 pct to $672.4 mln vs view $642.6 mln

* Board OKs additional share repurchase of $625 mln

* Shares up 1.5 percent (Adds executive and analyst comment, links to graphic, byline and updates shares)

By Phil Wahba

NEW YORK, April 19 (Reuters) - Hasbro Inc HAS.N reported a larger-than-expected quarterly profit, helped by double-digit sales gains in its girls’ toys like “Littlest Pet Shop” and in overseas markets, sending its shares higher.

The No. 2 toymaker, behind Mattel Inc (MAT.O), said its net revenue rose 8.2 percent to $672.4 million, far above the analysts’ average estimates.

The results came a few days after Mattel, home of Barbie and Hot Wheels, surprised Wall Street with a quarterly profit, suggesting a robust recovery in spending on toys.[ID:nN16228746]

“The toy industry as a whole is performing well,” said BMO Capital Markets analyst Gerrick Johnson. “Parents might not have more money than last year, but they have more certainty about their budget. Parents don’t cut back on their kids when they can plan.”

In addition, a lackluster crop of video games has boosted sales of more traditional toys, he said.

Hasbro said sales rose in all major product segments and geographic divisions. Some of the gain came from favorable foreign exchange rates, as sales outside of North America rose 17 percent, and Chief Financial Officer Deborah Thomas cautioned analysts that that advantage could wane this year.

Excluding currency movements, net revenue rose 5 percent. Hasbro Chief Executive Brian Goldner said that he expected the company to keep that momentum and reiterated his outlook for higher revenue and earnings per share in 2010.

Hasbro’s first-quarter net profit nearly tripled to $58.9 million, or 40 cents per share, from $19.7 million, or 14 cents a share, a year earlier.

Excluding a one-time tax adjustment gain, Hasbro reported a profit of 26 cents per share. Analysts on average were expecting earnings of 16 cents a share on sales of $642.6 million, according to Thomson Reuters I/B/E/S.

Hasbro said its board has authorized the repurchase of an additional $625 million worth of common stock. In the first quarter, it repurchased 2.2 million shares for $97.7 million at an average price of $35.35 each.

Shares of the company rose 1.5 percent to $40.45 after hitting a high of $40.77 earlier in the session. Mattel slipped 0.8 percent.


For a graphic comparing the share prices and earnings per share of Mattel and Hasbro, please see: link.reuters.com/den48j


Earlier this year, Hasbro said the momentum in its games and boys’ toys would help 2010 profit and revenue rise.

While sales in its products for boys rose 3 percent, it was girls and preschoolers that boosted Hasbro’s first-quarter sales the most, with increases of 16 percent and 18 percent respectively.

Sales of boys’ toys and those of games and puzzles, which were up 7 percent, together account for about two-thirds of overall sales. It said its Nerf and Tonka businesses were performing well.

Hasbro is expecting more gains from toys tied to the releases of two movies — “Iron Man 2,” set to open on May 7, and “Toy Story 3” — this year. Its lineup for 2012 is stronger, with “Stretch Armstrong”, “Battleship”, “The First Avenger: Captain America” and “Spider-Man 4” due for release.

Revenues from licensing tell 8 percent, mostly because of digital gaming

Starting in 2011, Hasbro will sell toys and games based on characters such as Elmo and Cookie Monster in the American children’s television series “Sesame Street.”

It is also in a joint venture with Discovery Communications Inc (DISCA.O) to form a new children’s television network — The Hub — and the creation of Hasbro Studios.

Goldner said on the call that the Hub would launch on Oct. 10, 2010. Hasbro said it would announce its line-up and schedule in about five weeks. (Additional reporting by Dhanya Skariachan; Editing by Derek Caney, Maureen Bavdek, Dave Zimmerman)

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