MAT Mattel Inc

Hasbro Inc.(HAS), engaged in the design, manufacture and marketing of games and toys, recently announced preliminary results for the fourth quarter and fiscal 2011 results.

The company expects to report revenues of $1.33 billion, up 4.0% year over year for the upcoming fourth quarter of 2011. Hasbro’s sales result during the crucial holiday season was below expectation as consumer spending continued to remain sluggish, resulting in lower demand in the United States and Canada after thanksgiving.

According to the Street consensus, the company is expected to post revenues of $1.39 billion in the fourth quarter, which is the holiday season and most of the retail companies generate a large proportion of their net revenues during this period.

The retail business was not booming in the holiday season and to drive traffic and boost sales, retailers also had to provide attractive discount to shoppers. 

For 2011, the second largest U.S. toymaker, after Mattel Inc (MAT), anticipates revenue growth of 7% or $4.28 billion as compared with $4.0 billion in 2010 and earnings per share upside of 2% to 4% implying profit of $2.79 to $2.85 per share versus $2.74 in 2010. The 2011 results also missed the Street expectation of earnings of $2.87 per share and revenue of $4.35 billion.

The top-line growth is buoyed by improved performance of several brands and higher revenue from the international market. Hasbro’s international segment is growing at a rapid pace and for the four consecutive quarters the segment has posted double-digit revenue growth. Over the last few years, Hasbro has been expanding in the emerging markets. Hasbro’s product line up for 2012 also remains solid and lucrative product associations with popular motion pictures ensure further growth.

One of its peers, JAKKS Pacific Inc (JAKK) also recently slashed its sales and earnings outlook for fiscal 2011, owing to the tough retail sales environment amidst the crucial holiday season. The company’s results were also unimpressive as it had to bear the brunt of increased markdown allowances and royalty expenses related to license guarantee shortfalls.

For 2011, the company lowered its net sales forecast to $660 million from the previous range of $770 million to $775 million and adjusted earnings guidance to 37 cents to 40 cents from the earlier projection of $1.32 and $1.35 per share.

The Zacks Consensus Estimate for the fourth quarter of 2011 and fiscal 2011 are pegged at $1.15 and $2.88, respectively. We expect estimates to go down in the coming days as the company’s preliminary results were below expectations based on the weak retail sales environment during the holiday season.

Hasbro expects to report its fourth quarter 2011 results on February 6, 2012.

 

Hasbro currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.

 
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