Hasbro reports higher than expected profits

HASBRO TOPPED Wall Street profit expectations yesterday as better inventory management and cost controls helped offset weak sales at the second-largest US toymaker.

The news came after larger rival Mattel also reported a higher-than-expected quarterly profit, supported by price increases and cost controls. The maker of Barbie dolls and Hot Wheels cars said it was well-positioned for the holidays. .

Hasbro, whose brands include Monopoly, G.I. Joe, Nerf and Mr Potato Head, has been working with its US retail partners to better manage inventories this year. It has been trying to shift toy deliveries closer to peak demand times.

It struggled in late 2011 when demand in north America tapered off after a strong start to what is typically the biggest selling season of the year. Hasbro is counting on retailers to order more inventory in the fourth quarter this year once they have a better read on consumer demand, Needham Co analyst Seán McGowan said.

Hasbro chief financial officer Deborah Thomas said yesterday the company plans to step up its marketing efforts in what she described as “an environment of significantly lower US retail inventory”.

Hasbro said, to drive demand in the fourth quarter, they will increase advertising spend by 30 to 40 per cent across television, social media and other online avenues.

Hasbro said it expects revenue and earnings per share to increase for the full-year 2012, excluding the impact of foreign exchange.

Net profit in the third quarter fell to $164.9 million, or $1.24 a share, from $171 million, or $1.27 per share, a year ago, ahead of analyst projections.

Sales fell 2 per cent to $1.35 billion, below analysts’ average estimate of $1.38 billion.

Hasbro’s toy unit for girls, reinvigorated by the launch of hot toys such as Furby, saw a 17 per cent rise in revenue, but sales at its boys’ unit fell 12 per cent, and those at its preschool division lost 5 per cent. Furby, an update of the furry toy from the 1990s, “is off to a great start,” Hasbro chief executive Brian Goldner said on a conference call. Goldner was also optimistic about Hasbro’s game business, which has long been a drag on profits. – (Reuters)