Tuesday, April 25, 2006

Hasbro Posts Wider 1st-Quarter Loss

Hasbro Inc., the nation's second biggest toy maker, on Monday reported a wider loss for the first quarter, and said the second quarter would be challenging as the company braces for a falloff in "Star Wars" merchandise.

The first quarter loss of $4.9 million, or 3 cents per share, for the three months ended April 2, was blamed largely on foreign currency fluctuation and new accounting rules for stock options. In the same quarter last year, Hasbro lost $3.7 million, or 2 cents per share.

Expenses related to stock-based compensation reduced results by 2 cents per share in the latest quarter. If similar expenses had been included a year ago, the loss for that period would have been 4 cents per share.

Revenue rose to $468.2 million from $454.9 million with a strong performance from Hasbro's North American operations. Currency fluctuations reduced revenue by about $9 million in the first quarter.

Analysts surveyed by Thomson Financial were expecting a loss of 1 cent per share, including stock-options expenses, on revenue of $430 million.

"While we feel good about the business for the full year, it's worth noting that the second quarter will be challenging," Alfred Verrecchia, president and chief executive of the Pawtucket-based company, said in a conference call Monday morning.

Verrecchia said the company expected a continued decline in merchandise sales linked to "Star Wars Episode III - Revenge of the Sith," which was released in theaters last year.

Hasbro's North American operations posted a 7 percent increase in revenue to $310.3 million, driven by board games and toy lines such as Nerf, Supersoaker and Littlest Pet Shop. Operating profit at the division rose by 3 percent to $4.77 billion.

Verrecchia said Candyland, Scrabble, Life and other board games had all performed well in the quarter.

"We've had good retail movement with the games business," he said.

Because of the changes in some foreign currencies versus the dollar, Hasbro's international segment saw revenue decline by 5 percent and its operating loss widen to $8.3 billion from $7.9 billion. On a constant-currency basis, international revenue rose 2 percent.

From Forbes, "Hasbro's toy brands include Mr. Potato Head, Milton Bradley games and Playskool. The company is the second-biggest toy maker in the United States behind Mattel Inc., which last week posted higher first-quarter earnings and reported sales of $793.3 million.

Verrechhia said the company expected to ship products later this year related to its licensing deal with Marvel Comics, which gives the company toy rights to characters including The Hulk, Captain America and Spider-Man.

He said the company was looking forward to the anticipated releases of the "Spider-Man 3" film and the live-action "Transformers" movie, both of which are due out in 2007.

Shares of Hasbro fell 27 cents, or 1.3 percent, to $20.66 in morning trading on the New York Stock Exchange. They have traded in a 52-week range of $17.75 to $22.35."

1 comment:

JPX said...

I love how they never state the most obvious reasons for the decrease in profits; with Hasbro's increasing cost cutting measures, including the use of cheaper materials and numerous repacks,coupled with a higher price point, collectors are frustrated and saying, "no thanks". I rarely purchase Star Wars figures these days because of all the reasons mentioned above. I find that if I do acquire something from the Star Wars brand, it's usually a collectible from the past when Kenner was in charge and making a quality product.