Hasbro Swings To A Profit, Outpacing Views On Strong Sales

Monday, 23 Apr 2007 | 8:56 AM ET

Hasbro Monday posted a profit that trounced expectations, on strong sales of Spiderman toys and its Littlest Pet Shop and Playskool brands.

First-quarter net income at the nation's No. 2 toy maker climbed to $32.9 million, or 19 cents a share, compared with a year-earlier loss of $4.9 million, or 3 cents a share.

Revenue rose 34% to $625.3 million from $468.2 million during the first-quarter, a period that is historically less critical to toy makers than the fourth quarter.

Analysts, on average, were expecting Hasbro to break even for the quarter, on $508.9 million in revenue.

The results come a week after Mattel , the largest U.S. toy maker, also posted a surprise first-quarter profit.

"Our core brands and new product initiatives performed very well with revenue growth for the quarter pretty balanced between our Marvel business and all our other Hasbro business," Chief Executive Alfred Verrecchia said in a statement.

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Hasbro has been rolling out more toys this year because of its licensing deal with Marvel Entertainment , which is releasing "Spider-Man 3" next month and "Fantastic Four: Rise of Silver Surfer" in June.

Hasbro's Transformers brand is also tied to the namesake film, which is slated for a July 4 release.

The company has said it expects its movie-related toys to be just as profitable as its other, more established brands like Nerf, Monopoly and Play-Doh.

"Our channel checks suggest that Spiderman 3 products have been well received in advance of the movie debut," Sterne, Agee and Leach analyst Margaret Whitfield wrote in a research note.

"Additionally, Mattel attributed competition, including Littlest Pet Shop as a factor in the downturn in Barbie sales," wrote Whitfield, who has a "hold" rating on Hasbro's shares.

Last year, Hasbro signed a 5-year, $205 million licensing deal with Marvel, giving it the right to produce toys and games based on the media company's stable of more than 5,000 characters, including X-Men and Captain America.

Revenue at the company's North American segment rose to $421.1 million from $310.3 million a year earlier.

Hasbro's international unit posted $187.7 million in revenue, up from $145.5 million a year ago.

The company also raised its quarterly dividend to 16 cents a share from 12 cents, and said it repurchased 2.5 million shares of common stock at a cost of $74 million during the quarter.

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