Hasbro shares jump on overseas growth, holiday optimism

Reuters

By Dhanya Skariachan

Oct 21 (Reuters) - Toymaker Hasbro Inc topped WallStreet profit and sales estimates on Monday as strong overseasdemand helped offset weakness at home, sending its shares to anew high.

Hasbro, the No. 2 U.S. toymaker, said it believes it cangarner "more than its fair share" of holiday-season sales, evenwith a more challenging consumer environment, as it rolls outnew games, focuses on brands that are selling well, and workswith retailers on promotions.

Both Hasbro and larger rival Mattel Inc, which alsobeat analysts' expectations for the third quarter, are gearingup for the holidays, the biggest selling period of the year.

Shares of Hasbro, known for brands such as Monopoly, Nerfand My Little Pony, were up 6.6 percent at $50.41 after hittinga new high of $51.68. Mattel shares rose 0.5 percent to $42.91.

Hasbro should also benefit from Transformers and Spider-Manmovies in 2014 and from Star Wars and Avengers movies in 2015,analysts said, as the company has toys linked to those films.Mattel has "good prospects, but it doesn't have as clearlyvisible a catalyst for sustained revenue growth as Hasbro has,"said Needham & Co analyst Sean McGowan.

Hasbro's U.S. business is "poised for future growth" withwork being done on the company's brands as well as the upcomingentertainment launches, Chief Executive Brian Goldner saidduring a conference call. Also, the Big Hugs Elmo toy thatdebuted this year is "off to a strong start," he said.

Hasbro has been trying to do a better job of managing itsU.S. business. As part of that push, and the push by retailersto keep inventory in check, Hasbro's inventory at its top fourU.S. retailers was down in the quarter.

Like Mattel, Hasbro was able to use strength in salesoutside North America to offset weakness in the United Statesand Canada during the third quarter. Goldner said a 22 percentrise in sales in emerging markets such as Latin America and theAsia Pacific boosted the company's quarterly results.

Revenue rose 11 percent to $582.7 million at Hasbro'sinternational unit, but fell 5 percent to $735.6 million in theUnited States and Canada.

The two toughest areas in terms of consumer sentimentcontinue to be Australia and the United States, Hasbro said.

Net earnings rose to $193.0 million, or $1.46 a share, from$164.9 million, or $1.24 a share, a year earlier.

Excluding a tax adjustment and restructuring and pensioncharges, the company earned $1.31 a share, topping analysts'average estimate of $1.29, according to Thomson Reuters I/B/E/S.

Sales rose 2 percent to $1.37 billion, beating analysts'expectations of $1.34 billion. Strength in girls' toys and ingames helped offset weakness in the boys and preschool units.

Hasbro, which is in the middle of a restructuring program,cut its cost of sales by 3.1 percent in the quarter.

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