) first-quarter 2013 adjusted earnings per share of 5 cents beat
the Zacks Consensus Estimate by 66.7% and increased 25.0% year
over year. Top-line growth combined with adjusted operating
margin expansion led to the year-over-year growth in earnings.
However, on a reported basis, including restructuring charges and
favorable tax adjustments, the company posted loss per share of 5
cents, wider than the year-earlier loss of 2 cents per share.
Hasbro's net revenues of $663.7 million grew 2.2% from the
year-ago quarter and beat the Zacks Consensus Estimate of $641.0
million. Revenues include a negative $3.3 million impact from
currency translation. The Games, Girls and Preschool product
categories were the major contributors to the top-line growth.
Behind the Headline Numbers
Hasbro's product segments comprise Girls, Games, Boys and
Preschool categories. Revenues at the
category grew 26% to $230.9 million. Magic: The Gathering, Boys
Action Gaming, Angry Birds Star Wars and Transformers games
performed well in the reported quarter.
category surged 23.0% to $114.8 million year over year. Products
such as The Furby, My Little Pony and One Direction supported
category saw an 8% increase in revenues to $75.2 million driven
by Play-Doh and Playskool Heroes brands.
Despite decent performance of Marvel, Nerf and G.I. Joe products,
category fell 20% to $242.8 million due to sluggish performance
of several other brands.
Segment-wise, net revenues from the
U.S. and Canada
segments grew 4% year over year to $342.1 million, reflecting
growth in the Girls and Games categories.
Though revenue increase was moderate, the segment's operating
profit skyrocketed 162.0% to $37.7 million driven by improved
Net revenues at the
segment were flat at $289.8 million. Revenues in the
International segment reflect a tailwind from Latin America (up
17%) and Asia-Pacific (21%) but a headwind from Europe (down
7.0%). Net revenues in the International segment grew 1%
excluding a negative $3.0 million impact of foreign exchange.
The segment's operating loss was $4.5 million, narrower than the
year-ago loss of $5.1 million.
Entertainment and Licensing
segment revenues grew 5.0% year over year to $30.8 million. The
sale of television programming in all formats in the U.S. and
abroad drove segment revenues. However, the segment's operating
profit declined 32% to $5.3 million on a year-over-year basis.
As a percentage of net revenues, Hasbro's royalty expenses fell
60 basis points (bps), and cost of sales dipped 20 bps.
Selling-distribution expenses declined 160 bps, advertising grew
10 bps whereas product development costs were flat,. All these
culminated to an adjusted operating margin expansion of 190 bps
In the fourth quarter of 2012, Hasbro adopted a program to save
up to $100 million annually by 2015. Gross savings for 2013 are
expected to be $45 million - $48 million, leading to an expected
net savings of $13 million to $15 million, excluding potential
After six consecutive quarters of top-line miss, Hasbro's
revenues beat the Zacks Consensus Estimate this time and grew
year over year as well. We continue to have a favorable view of
the company's persistent efforts to curtail costs and improve
earnings amid a sluggish operating environment. The company is in
a restructuring mode, which involves several brand building and
cost saving initiatives.
However, we would prefer to remain on the sidelines at the
current level and wait until there is further clarity on the
aforesaid initiatives. Further, the Boys products segment, which
was once a powerhouse brand of the company, continues to remain
sluggish in the recent times. Hasbro currently carries a Zacks
Rank #3 (Hold).
As a point of reference, one of the major toy companies,
) which reported last week, beat both earnings and revenues
estimates in its first quarter. Some other toy companies which
will report their earnings in the next month include
LeapFrog Enterprises Inc.
Activision Blizzard Inc.
). LeapFrog is slated to report on May 2 while Activision
Blizzard will likely report on May 6.
ACTIVISION BLZD (ATVI): Free Stock Analysis
HASBRO INC (HAS): Free Stock Analysis Report
LEAPFROG ENTRPS (LF): Free Stock Analysis
MATTEL INC (MAT): Free Stock Analysis Report
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