November 4, 2013 / 10:56 PM / 4 years ago

Rising competition weighs on Leapfrog's outlook

(Reuters) - Toy company LeapFrog Enterprises Inc LF.N cut its full-year sales forecast as rising competition hurt demand for its LeapPad tablets, sending its shares down as much as 13 percent after the bell.

John Barbour, CEO of LeapFrog Enterprises, speaks at the Reuters Consumer and Retail Summit in New York June 27, 2011. REUTERS/Brendan McDermid

The company also said it “sees a weak retail climate and growing concern surrounding this holiday season, especially in the U.S.”

The holiday selling season is when many toy makers make more than a third of their sales.

Ascendiant Capital Markets analyst Edward Woo said the company’s LeapPad is facing tough competition from other tablets and that prices of these tablets are getting lower.

“It’s not a good sign when the company is lowering its expectations heading into the holidays,” Woo said.

The company, known for its LeapPad educational toys, forecast full-year sales of $570 million to $590 million. Analysts on average were expecting sales of $632.5 million, according to Thomson Reuters I/B/E/S.

Net income fell to $26.4 million, or 37 cents per share, in the third-quarter ended September 30, from $41.7 million, or 60 cents per share, a year earlier.

Analysts were expecting earnings of 32 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 4 percent to $201 million, but still fell short of analysts’ estimates of $206.7 million.

LeapFrog shares were trading down 10 percent at $7.80. They had closed at $8.67 on Monday on the New York Stock Exchange.

(Refiles to correct spelling of “analysts” in paragraph 8)

Reporting By Maria Ajit Thomas in Bangalore

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