(Adds comments about joint venture with Discovery Communications
and share price.)
DOW JONES NEWSWIRES
Hasbro Inc.'s (HAS) second-quarter earnings rose 4.8% amid
strong sales of most of its toy brands, including those related to
the Transformers movie sequel, but revenue fell just short of Wall
Street's expectations while profit topped estimates. Meanwhile, the
toy maker said its TV network and Web site joint venture with
Discovery Communications Inc. (DISCA) won't hurt earnings as much
as previously expected. President and Chief Executive Brian Goldner
reiterated Hasbro's long-stated target of growing 2009 revenue and
per-share earnings - despite a 15 to 20 cents a share hit from the
television investment and assuming no major deterioration in the
global economy or in the value of foreign currencies.
Hasbro in April said it expected the Discovery joint venture to
hurt 2009 earnings by 25 to 30 cents a share, but lower financing
costs and amortization of expenses tied to the deal prompted the
revision. The Pawtucket, R.I., company expects the deal to hurt
2010 earnings by 25 to 30 cents a share, down from previous
guidance of 30 to 35 cents a share.
For the second quarter, Hasbro reported a profit of $39.3
million, or 26 cents a share, up from $37.5 million, or 25 cents a
share, a year earlier. The latest period included a 6 cent charge
related to the Discovery joint venture.
Revenue increased 1% to $792.2 million, but rose 7% in constant
currency.
Analysts polled by Thomson Reuters most recently were looking
for earnings of 23 cents on revenue of $797 million.
Gross margin fell to 59.7% from 60.7%.
Hasbro is holding a conference call to discuss results at 8:30
a.m. ET.
Shares recently gained 4.4% to $26.50 in premarket trading. The
stock is down by roughly a third in the past year.
Toy makers' sales had slumped in recent quarters as consumers
spend less and a rebound isn't seen anytime soon. For its part,
Hasbro is placing its hopes on toys tied to the smash
"Transformers: Revenge of the Fallen" to boost sales. Much of
Hasbro's recent growth stems from its success featuring its toys in
hit movies as its lineup includes G.I. Joe, Star Wars and
Spider-Man products. A G.I. Joe movie is coming up next month.
Rival Mattel Inc. (MAT) on Friday reported another quarter of
slumping sales, partly attributing it to lack of toys tied to
summer entertainment, though its bottom line benefitted from cost
cuts.
In its U.S. and Canadian segment sales rose 4.8%. International
sales declined 9.9%, hurt by foreign currency effects.
Hasbro in April unveiled a pricey joint venture that will give
it shared control with Discovery of a new cable-TV network and Web
site for children based on Hasbro brands and the Discovery Kids
network.
(Mary Ellen Lloyd contributed to this report.)
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
tess.stynes@dowjones.com
