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Hasbro Profit Surges 23% on Strong U.S. Sales

October 21, 2003|From Reuters

Hasbro Inc., the nation's No. 2 toy maker, Monday posted a nearly 23% jump in third-quarter earnings, boosted by strong U.S. sales of popular new toys as well as classic toys and board games.

The stronger-than-expected results helped push Hasbro shares to their highest level in nearly four years. Hasbro shares closed up $1.06, or 5.1%, at $21.70 on the New York Stock Exchange. Shares hit $21.74 earlier in the session, their highest level since December 1999.

"Hasbro had a terrific quarter. Sales and earnings came in above our estimates," said Anthony Gikas, a U.S. Bancorp Piper Jaffray analyst. "Their product is well-aligned at retail right now. The balance sheet continues to improve. Management is doing a great job."

Pawtucket, R.I.-based Hasbro, which makes G.I. Joe and the Easy-Bake oven, posted profit of $68.5 million, or 38 cents a share, up from $55.8 million, or 32 cents, a year earlier.

Excluding one-time costs for an accounting change, the company earned $85.8 million, or 48 cents a share, in the third quarter. Analysts had expected 42 cents a share.

Hasbro said in its conference call that it was "cautiously optimistic" about the key upcoming holiday season and that several major customers had named toys among the stronger categories. Net revenue rose 18.3% in the quarter to $971.1 million, with revenue in the U.S. toy segment up 23% to $377.3 million.

International revenue was $328.1 million, up 22%. Excluding the benefit of the weak U.S. dollar, which lifts the value of overseas sales when they are converted into dollars, revenue increased 13% to $302.3 million.

Hasbro's strong sales across the board come less than a week after its chief rival, Mattel Inc., reported sluggish U.S. sales that were only partially offset by international growth.

The popularity of Hasbro's VideoNow, a hand-held video player, and Beyblade, a line of spinning tops that children can battle in "arenas," has helped propel profit.

Game segment revenue rose 11% to $250.2 million, boosted by Monopoly, Trivial Pursuit 20th Anniversary Edition, Bulls-Eye Ball and Magic: The Gathering trading card games.

Hasbro's shares rose 3.7% in the quarter, outperforming Mattel, whose shares slipped 4.8%.

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