Hasbro sees profits rise 56%

Deseret News (Salt Lake City), Jul 19, 2005 by Associated Press

NEW YORK -- Barbie was no match for Darth Vader during the second quarter.

Mattel Inc., the maker of Barbie dolls and Hot Wheels cars, reported a loss Monday due to a large tax expense related to the repatriation of foreign profits. But the force was clearly with rival Hasbro Inc., whose stock rose to a new 52-week high Monday after it reported its profit soared 56 percent, helped by a strong performance from "Star Wars" products.

Excluding the tax charge, Mattel's results still missed analysts' projections as the world's largest toy maker continues to struggle with weak sales of Barbie. But results from Hasbro, the No. 2 toy maker, beat Wall Street projections.

"From what I hear from retailers, 'Star Wars' (products) did better than expectations," said independent toy consultant Chris Byrne. "Barbie is in transition."

But Byrne added that the real test in the battle for toy sales will be from Oct. 1 through Christmas Eve, when up to 70 percent of annual toy sales are generated.

"I'm very excited about all the innovation coming from both Hasbro and Mattel," Byrne said, but he warned that the industry continues to struggle with higher production costs amid higher oil prices.

Mattel's loss in the second quarter totaled $94 million, or 23 cents per share, compared with net income of $23.5 million, or 6 cents per share, in the second quarter a year ago.

The loss reflects a tax expense of $112.9 million, or 28 cents per share, related to the company's decision to return foreign profits of about $2.4 billion to the United States under a 2004 law that allows corporations to do so at a reduced tax rate.

Excluding the tax charge, the El Segundo-based company's earnings were 5 cents per share.

Shares of Mattel fell 4.4 percent, or 86 cents, to close at $18.59 on the New York Stock Exchange in Monday trading. The company's stock has fallen about 10 percent from the 52-week high of $21.64 reached in April, as investors grow concerned about weak sales of the Barbie and Hot Wheels toys.

Hasbro's second-quarter net income grew to $29.5 million, or 13 cents per share, from $18.8 million, or 6 cents per share, a year earlier. Revenue climbed 11 percent to $572.4 million from $516.4 million, boosted by $9.1 million from favorable currency exchange rates.

Analysts expected Hasbro to earn 8 cents per share on $542.4 million in revenue during the three months that ended on June 26.

Toy revenue rose 25 percent on strong results from "Star Wars" toys as well as other brands including Nerf, Transformers, My Little Pony and Littlest Pet Shop. In contrast, the company's games segment revenue fell 12 percent, due mainly to a decline in trading card games and higher seasonality of board game shipments.