Hasbro rides My Little Pony to stronger profit
Hasbro Inc reported a better-than-expected quarterly profit on strong demand for toys such as My Little Pony, that have strong tie-ins with TV shows aimed at little girls.
Sales of toys aimed at girls grew 21 percent in the first quarter, while toys for boys rose just 2 percent, although the company's boys lines will likely be boosted by the upcoming release of Transformer and Spider-Man movies.
Hasbro's shares rose as much as 4.2 percent to touch an all-time high of $56.91 in early trading on Monday.
The growth in Hasbro's sales of toys for girls contrasts with the fading sales of Barbie dolls, which dragged rival Mattel Inc to its first quarterly loss in nearly five years.
Barbie, a billion-dollar brand modeled on an adult woman and her career, has fallen out of favor with girls who increasingly prefer dolls with storylines more in keeping with their age.
Hasbro has tasted success with its My Little Pony franchise, including a TV series based on the equine characters with colorful bodies and manes. Accessories include teenage human versions of the ponies, plush toys, clothing and books.
"With My Little Pony, Hasbro is having tremendous success because they are developing not just physical toys but also content that helps little girls understand storylines and character development," Piper Jaffray analyst Stephanie Wissink said.
Mattel has been successful with its American Girl toy range, which comprise chubby-faced dolls portraying 8-11 year-old girls of different ethnicities. They are sold with storybooks from the viewpoint of the dolls.
Sales of Hasbro's toys for girls was also helped by strong demand for a bow-and-arrow-based offshoot of its Nerf line of gun toys - the Nerf Rebelle - that cashed in on the popularity of the 'Hunger Games' movie series.
The girls' toy business grew to $138.7 million in the first quarter ended March 30 and accounted for 20.4 percent of total revenue, up from 17.3 percent a year earlier.
Revenue from boys' toys, the company's largest business category, inched up to $247.8 million. Revenue from both preschool toys and games, which include Monopoly and Pictionary, fell 4 percent.
"We're seeing our market share in girls, particularly in dolls, grow in the U.S. and around the world and we're also seeing that growth in outdoor activities where Nerf Rebelle has scored ...," Hasbro Chief Executive Brian Goldner said on a post-earnings conference call.
Many of Hasbro's action figures are based on partnerships with studio films, which vary in popularity each year.
Demand has been weak industrywide for action figures and preschool toys, two important categories for Hasbro, as children shift their focus to mobile devices, analysts have said.
However, Wissink said she expects shipments of action figures to accelerate in the second quarter with the release of the new Spider-Man movie in May and the next installment of the Transformers franchise in late June.
Hasbro owns the Transformers brand and holds the toy licenses for Marvel Comics' characters, which have had a phenomenal box office run over the last few years, most recently with the success of "Captain America: The Winter Soldier".
Hasbro's first-quarter revenue rose 2 percent to $679.5 million, falling short of the average analyst estimate of $690.17 million.
International revenue rose 5 percent to $305.5 million, offsetting a 1 percent decline in sales in North America.
Net income was $32.1 million, or 24 cents per share, compared with a net loss of $6.7 million, or 5 cents per share, a year earlier.
Excluding items, the company earned 14 cents per share.
Analysts on average had expected a profit of 10 cents per share, according to Thomson Reuters I/B/E/S.
Hasbro shares, which have risen 18.9 percent in the 12 months to Thursday's close, were up 0.7 percent at $55.00 in afternoon trading on the Nasdaq. Mattel shares were up 1 percent at $37.85 on Monday.
At Thursday's closing price, Hasbro's stock was trading at 16.67 times forward earnings. Mattel's shares were trading at a multiple of 13.75.
(Reporting by Siddharth Cavale and Shailaja Sharma in Bangalore; Editing by Maju Samuel and Savio D'Souza)