) posted mixed first quarter 2014 results. Its quarterly earnings
beat the Zacks Consensus Estimate while revenues missed the
Adjusted earnings per share of 14 cents beat the Zacks Consensus
Estimate of 11 cents by 27.2% and were up 180.0% from 5 cents
reported in the year-ago quarter. The upside was driven by higher
year over year revenues, decline in expenses and lower share
On a reported basis, including favorable tax adjustments, the
company posted earnings per share of 24 cents compared to a loss
of 5 cents in the year-ago quarter.
Hasbro's net revenue of $679.0 million increased 2.4% year over
year driven by continued growth in the Girls Category and a
turnaround in the Boys segment. However, it missed the Zacks
Consensus Estimate by a meager 0.7%, which we believe was due to
the underperformance of the Games and Pre-school segment.
Revenues also experienced an unfavorable impact from currency
Behind the Headline Numbers
Hasbro's product segments comprise Girls, Games, Boys and
Preschool categories. Games category revenues declined 4.5% to
$220.5 million. Decline in revenues from Action Battling games as
well as Duel Masters Brand, a card game, was partially offset by
an increase in revenues from Magic: The Gathering and Monopoly.
The Girls category surged 21.0% year over year to $138.7 million,
thanks to continued strong growth from My Little Pony, My Little
Pony Equestria Girls and Nerf Rebelle.
Preschool category revenues dipped 3.6% to $72.5 million due to
lower revenues from Playskool products.
After declining throughout 2013, revenues from the Boys category
went up 2.1% year over year driven by growth in Nerf and Marvel
products, partially offset by continued year-over-year declines
in Beyblade sales.
Segment-wise, net revenue from the U.S. and Canada segments
declined 1.3% year over year to $337.7 million owing to a decline
in the Boys, Games and Preschool categories in the region.
However, it was partially offset by higher revenues from the
Girls category. The segment's operating profit also declined 5.0%
to 35.8 million.
International segment revenues grew 5.4% to $305.5 million.
Revenues in the International segment reflect an increase of 8.0%
and 17.0% in Europe and Latin America, respectively, offset by a
decline of 13.0% in Asia Pacific. The segment's operating profit
was $2.4 million compared to an operating loss of $4.5 million in
the year-ago quarter.
Entertainment and licensing segment revenues increased 13.3% year
over year to $34.9 million, driven by growth in lifestyle
licensing as well as the addition of Backflip Studios to the
segment. The segment's operating profit increased 13.2% on a
year-over-year basis to $6.0 million.
Hasbro's cost of sales ratio improved 220 basis points (bps). Its
selling-distribution-administration expenses ratio declined 210
bps while there was a 20 bps decrease in royalty expenses ratio.
Adjusted operating profit was up 10.0% year over year owing to a
decline in cost of sales and other expenses.
Hasbro put up a decent performance this quarter after missing the
Zacks Consensus Estimate on both lines in the fourth quarter of
2013. The Girls segment was the chief growth driver this quarter
while the Boys segment managed to stage a comeback. The
company was also successful in lowering costs, which improved
margins. All these results come in the wake of Hasbro's continued
efforts to establish its presence worldwide through strategic
partnerships, rapid growth in emerging markets as well as cost
containment efforts to cope up with the difficult operating
However, there is still some time before these initiatives start
paying off fully. Moreover, we believe consumer spending
uncertainty still lingers amid sluggish economic growth in the
U.S. with customers reducing their non-essential purchases.
Hasbro carries a Zacks Rank #4 (Sell).
However, some better-ranked stocks in the toys and games industry
Glu Mobile, Inc.
JAKKS Pacific, Inc.
). While Glu Mobile sports a Zacks Rank #1 (Strong Buy), JAKKS
Pacific and Mattel hold a Zacks Rank #2 (Buy).
GLU MOBILE INC (GLUU): Free Stock Analysis
HASBRO INC (HAS): Free Stock Analysis Report
JAKKS PACIFIC (JAKK): Free Stock Analysis
MATTEL INC (MAT): Free Stock Analysis Report
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