DOW JONES NEWSWIRES
Hasbro Inc. (HAS) posted a 30% drop in fourth-quarter net income
as margins fell amid weak holiday toy sales and the stronger
dollar.
Toy makers, thought to be resilient to the economy's ups and
downs, haven't escaped the broad economic downturn. In the past,
the industry has sidestepped harsh economic times as parents buy
kids toys in both good times and bad. But Hasbro's results -
following rival Mattel Inc.'s (MAT) 46% net income drop last week -
show that the toy giants may not be as recession-proof as once
thought.
According to industry consultant Lutz Miller, U.S. holiday toy
sales dropped an estimated 6%, a record.
Hasbro President and Chief Executive Brian Goldner said Monday
that "given the severity of the downturn in global economies,"
Hasbro will focus this year on "keeping costs down, managing our
operating cash flow and continuing to invest in our business for
the long term."
He added the company will likely grow revenue and earnings per
share, "absent a material deterioration in economic conditions or
the value of foreign currencies." Analysts surveyed by Thomson
Reuters were, on average, expecting 3% revenue growth for 2009 and
9% earnings growth.
Hasbro, known for its GI Joe action figures and Tonka trucks,
reported fourth-quarter net income of $93.6 million, or 62 cents a
share, down from $133.7 million, or 84 cents a share, a year
earlier.
Revenue fell 5.1% to $1.23 billion, despite strong sales of
Playskool and board games such as Scrabble. Excluding the stronger
dollar's impact, revenue rose 1%.
Analysts were expecting earnings of 75 cents a share on revenue
of $1.27 billion.
Gross margin fell to 56.2% from 58.5% amid increased markdowns
coordinated with retailers to drive holiday sales. But the price
cuts "resulted in our finishing 2008 in a much better inventory
position than we would have otherwise," said Chief Financial
Officer David Hargreaves.
Sales in the U.S. and Canada fell 0.4%. International sales
dropped 12%, hurt by the stronger dollar.
Shares of Hasbro closed Friday at $23.54, and there was no
premarket trading. The stock is off 40% since September.
-By Mike Barris, Dow Jones Newswires; 201-938-5658;
mike.barris@dowjones.com