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Hasbro performing well amid toy-industry challenges

Earnings meet expectations; CEO optimistic

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Hasbro's headquarters, above, is in Pawtucket, R.I. Among U.S. toymakers, Hasbro is second to Mattel.

Hasbro’s headquarters, above, is in Pawtucket, R.I. Among U.S. toymakers, Hasbro is second to Mattel.

Stew Milne, Associated Press

PROVIDENCE, R.I. — Hasbro Inc., the nation's second-largest toymaker, said strong sales of core brands such as Transformers and My Little Pony contributed to a fivefold increase in first-quarter profit.

But poor demand for other products, such as Trivial Pursuit and Beyblades, disappointed investors and pushed its stock price downward.

The toymaker, based in Pawtucket, R.I., reported Monday net earnings of $6.5 million, or 3 cents a share, for the January-March period, up from $1.2 million, or a penny a share, a year ago.

The report was in line with the consensus analyst estimate, according to a survey by Thomson First Call.

Revenue rose 2.7 percent to $474.2 million from $461.8 million a year ago but short of the $480.4 million expected by analysts. U.S. toy sales fell 0.7 percent, while the games segment rose 14 percent.

Chief executive Alfred Verrecchia said he was pleased with the company's performance in what he characterized as an uncertain retail environment, marked by stores keeping their inventory stocks low. Hasbro trails only Mattel Inc. in toy manufacturing.

"We've seen shipments into retailers at a pace lower than our point of sale," he said, adding that getting an order out of some retailers was "like pulling teeth."

Verrecchia said new products, including a stuffed toy of the animated film ogre Shrek, should boost sales in the second half of the year.

The toy industry is facing several challenges amid a wave of retail consolidation and pressure on toy sellers to lower prices to remain competitive.

KB Toys, which plans to close nearly a third of its stores, sought bankruptcy protection earlier this year. Toys "R" Us, the nation's second-largest toy retailer, is in the midst of a strategic evaluation. It also said late last year it would it close its 146 freestanding Kids "R" Us stores and its 36 Imaginarium specialty toy stores.

But Verrecchia said store closings shouldn't shrink the toy market.

"I think consumers are going to find what they need. I don't suspect store closings . . . are going to reduce the demand for toys," he said.

Hasbro credited the successful launch last month of Duel Masters, a trading card came, with the 14 percent increase in game sales.

International revenue climbed 3 percent to $180.7 million. Excluding the benefit of the weak U.S. dollar, which lifts the value of overseas sales when they are converted into dollars, international revenue fell 8.8 percent to $159.9 million.

Hasbro shares fell 87 cents, or 4 percent, to close at $21 Monday on the New York Stock Exchange.