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Toy maker Hasbro 3Q net income rises on international strength but falls short of expectations
NEW YORK (AP) ' Hasbro Inc. said Monday that its third-quarter profit rose more than 10 percent as international growth and sales of its boys' toys like Nerf dart blasters and Transformers helped offset weakness in the U.S.
Results fell short of Wall Street expectations, however. The maker of My Little Pony and Scrabble said that had partly to do with the fact that some orders in the U.S. and Canada were pushed into the fourth quarter rather than the third quarter this year.
CEO Brian Goldner said many of its offerings for the all-important holiday season are just hitting shelves. Some of Hasbro's toys that have made "hot toy" watch lists include Let's Rock Elmo, an interactive singing doll; Beyblades, a spinning top game, and Nerf Vortex foam dart blasters.
The holiday season is crucial for toy makers, which can get up to 40 percent of their annual revenue during the period.
"Last year's holiday performance was affected by softer U.S. consumer demand, in particular in games," said Goldner. "In the U.S., we believe we are in a stronger position than last year as we entered the fourth quarter with less inventory at retail as well as positive trends in point-of-sale during the third quarter."
Last year, many toy retailers were stuck with excess inventory when sales slowed in December after a brisk November.
This year retailers are being more cautious about inventory. It is important for retailers and toy makers to strike the right balance on inventory during the holidays ' if inventory levels are too high, markdowns and discounts are necessary to clear off shelves. But if they are too low, a toy retailer runs the risk of running out of stock on a "hot" holiday toy.
Goldner said retailers are poised for a "fairly robust" holiday season.
"They all plan that their business with us will be up this year and are starting with low inventory, which is good," he said. "As we all know, the economy is not in great shape. We've still got high unemployment, so I think they are (a) certain level of cautious, but they certainly are planning (for) the business to be up."
Hasbro said net income rose to $171 million, or $1.27 per share. That compares with $155.2 million, or $1.09 per share, a year ago. Analysts expected earnings of $1.31 per share, according to FactSet.
Revenue rose 5 percent to $1.38 billion from $1.31 billion a year ago. Analysts expected $1.45 billion.
Hasbro, based in Pawtucket, Rhode Island, said revenue from the U.S. and Canada fell 7 percent to $764.6 million. International revenue rose 23 percent to $563.3 million.
Sales of boys toys rose 15 percent to $534.6 million, while the girls category fell 4 percent to $259.1 million. Revenue from sales of puzzles and games fell 6 percent to $364.7 million.
On Friday, Hasbro's larger rival Mattel Inc. reported its third-quarter net income rose nearly 6 percent while revenue rose 9 percent to nearly $2 billion.
Hasbro shares edged up 6 cents to $34.81 in late morning trading after falling as low was $32.84 earlier in the session.