Hasbro Revenues Fall on Weak Holiday Sales - Transformers Turnaround Expected

Hasbro Inc (HAS.O) touted a strong entertainment lineup for 2011, including toys modeled after the movie "Transformers -- Dark of the Moon", to reassure investors about its future sales prospects after a lackluster finish to the all-important holiday selling season.

The company, which missed sales estimates in the key fourth quarter on tepid U.S. demand for games and puzzles, on Monday forecast a rise in sales and profits in 2011. Its shares rose 1.8 percent, reversing earlier losses.

"We believe the revenue shortfall was due to a convergence of a few negative factors late in the final quarter of the year and is not emblematic of our long-term business, which remains on track for growth in 2011 and beyond," Chief Executive Brian Goldner said on a call with analysts.

Many analysts also chose to focus on the second-largest U.S. toy company's comments on 2011 rather than the holiday sales miss.

"With 'Transformers' being the big movie property, most people are getting comfort and feeling better about their outlook," Edward Woo, analyst at Wedbush, told Reuters.

He recommended shares of Hasbro to people looking to invest in the toy space this year.

"I like Hasbro. I think 'Transformers' is going to be a very big property for them," Woo said. "That's a very clear catalyst for the stock."

He has an "outperform" rating on Hasbro and a "neutral" on Mattel's stock.

Sales at the maker of Nerf foam toys and Monopoly board games fell 7 percent to $1.28 billion in the quarter, missing the analysts' average estimate of $1.3 billion. Sales at its games and puzzles segment fell 22 percent.

Goldner blamed some of the weakness on Hasbro's marketing programs.

"We have this great big broad portfolio of games and yet our messages were probably too diffuse, too numerous, and didn't have the impact," Goldner said, adding the company was working to make changes "immediately."

Last week, industry leader Mattel In (MAT.O) handily beat Wall Street estimates in its fourth quarter covering the holidays.

"Mattel appears to have the best company/channel inventory position, and Hasbro the most challenging inventory position exiting Christmas/holiday 2010," Wells Fargo analyst Tim Conder wrote, but he too is optimistic about Hasbro's line-up for 2011 and 2012.

DOG DAYS ARE OVER?

The company, which in January warned about an unexpected drop in sales citing weak U.S. demand toward the end of the holidays, forecast a rise in sales and profits in 2011 as its recent investments bear fruit.

This year, Hasbro will sell toys and games based on characters such as Elmo and Cookie Monster from the U.S. children's television series "Sesame Street."

The toymaker is also launching toys, digital games and other licensed products related to the movie "Transformers -- Dark of the Moon", slated for a July release.

Late last year, the company also launched a new children's television network The Hub in a joint venture with Discovery Communications Inc (DISCA.O).

"In 2012, we have quite a good lineup. Obviously we are very excited about ... the restaging and reinvention of Star Wars in 2012 in 3-D, coming sometime early in the year," Goldner told analysts. Hasbro will also launch toys based on the "Avengers", "Battleship" and "Spiderman" movie franchises.

In the fourth quarter, Hasbro's net profit fell to $140.0 million, or 99 cents a share, from $165.6 million, or $1.09 a share, a year earlier. Analysts on average were expecting it to earn 92 cents a share, according to Thomson Reuters I/B/E/S.

Cost controls and strength in emerging markets in the main helped the company beat profit estimates.

Hasbro's international sales rose 12 percent in the quarter covering the key holiday selling season even as U.S. demand for games fell late in the year.

Read the original article at https://www.reuters.com/article/2011/02/07/us-hasbro-idUSTRE7161XW20110207?pageNumber=2