) posted second quarter 2014 results with both earnings and revenue
missing the Zacks Consensus Estimate. Adjusted earnings per share
of 36 cents missed the Zacks Consensus Estimate of 37 cents by a
penny. However, earnings per share were up 24.1% from 29 cents
reported in the year-ago quarter driven by higher year-over-year
revenues and lower share count.
On a reported basis, including favorable tax adjustments, the
company posted earnings per share of 26 cents, down 7.1% year over
Hasbro, Inc - Quarterly EPS (BNRI) |
Hasbro's net revenue of $829.3 million increased 8.2% year over
year driven by continued growth in the Girls Category, significant
growth in the Boys segment and a 17.0% increase in international
sales. However, it missed the Zacks Consensus Estimate of $843.0
million by 1.6%, which we believe was due to the underperformance
of the Games and Pre-school segment. Revenues also experienced an
unfavorable impact from currency translation.
Behind the Headline Numbers
Hasbro's product segments comprise Games, Girls, Preschool and Boys
category revenues declined 12.0% to $225.7 million. Decline in
revenues of several brands, including Twister, Duel Masters and
Magic: The Gathering was partially offset by an increase in
revenues from Monopoly, The Game Of Life, and initial shipments of
category surged 10.0% year over year to $163.8 million, thanks to
continued strong growth from My Little Pony, My Little Pony
Equestria Girls and Nerf Rebelle.
category revenues dipped 4.0% to $103.9 million due to lower
revenues from Playskool and Sesame Street products.
After declining throughout 2013, the
category posted growth in revenues for the second consecutive
quarter. Revenues were $335.8 million, up 32.0% year over year
driven by growth in Transformers and Marvel products.
Segment-wise, net revenue from the
U.S. and Canada
segments declined 2.0% year over year to $383.0 million owing to a
decline in the Games and Preschool categories in the region.
However, it was partially offset by higher revenues from the Girls
and Boys category. The segment's operating profit also declined
20.5% to 46.9 million.
revenues grew 17.0% to $396.8 million. Revenues in the
International segment can be attributed to double-digit growth in
Europe, Latin America and Asia Pacific as well as growth in the
Boys and Girls categories. The segment's operating profit was $29.2
million, up 98.0%.
Entertainment and licensing segment
revenues increased 35.0% year over year to $47.7 million, driven by
growth in lifestyle licensing, digital gaming as well as the
addition of Backflip Studios to the segment. The segment's
operating profit increased 295.0% on a year-over-year basis to
Hasbro's cost of sales ratio declined 60 basis points (bps). Its
selling-distribution-administration expenses ratio declined 120 bps
while there was a 190 bps increase in royalty expenses ratio.
Adjusted operating profit was up 8.0% year over year owing to
increase in revenues.
Though the company missed the Zacks Consensus Estimate on earnings
and revenue, both were up considerably year over year. The Girls
segment continues to drive growth. Moreover, the Boys segment
maintained the trend of year-over-year growth. The favorable
numbers can be attributed to Hasbro's consistent efforts to
establish its presence worldwide through strategic partnerships and
rapid growth in emerging markets. However, 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 #2 (Buy). Investors interested in the
industry can also consider
Electronic Arts Inc.
) that sports a Zacks Rank #1 (Strong Buy). Meanwhile, another
Glu Mobile, Inc.
) will report its results on Jul 30, 2014 while
Activision Blizzard, Inc.
) will report its earnings on Aug 5.
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