Hasbro Misses Top and Bottom Lines - Analyst Blog
23 Abril 2012 - 6:00AM
Zacks
Hasbro Inc. (HAS)
has reported first quarter 2012 adjusted earnings per share of 4
cents, which lagged the Zacks Consensus Estimate of 7 cents. The
earnings were also below the year-ago level of 12 cents. On a GAAP
basis, Hasbro reported a 2 cents loss in the quarter.
Hasbro’s net revenue of $648.9
million slid 3.0% from the year-ago quarter and also missed the
Zacks Consensus Estimate of $670.0 million. Foreign exchange had an
unfavorable impact of $8.5 million. Revenue could not utilize one
extra week of operation in the first quarter of 2012 compared to
the year-earlier quarter.
After an outperformance for quite
some time, the Transformers and Beyblade brands were flat in the
quarter. Entertainment backed brands like Marvel, Star Wars, Kre-O
were the factors to be thanked for the contribution to revenue.
Hasbro continued to return value to
investors in the form of a share repurchase and dividend
distribution.
Performance
Highlights
Hasbro experienced worldwide net
revenue growth in two of its four major product categories, namely
Boys and preschool which inched up a respective 4% and 2% to $302.8
and $69.9 million, on an annualized basis. On the other hand, Girls
and Games categories fell 18% to $93.2 million and 9% to $181.9
million, respectively.
Geographically, net revenue from
the U.S. and Canada segment declined 16% year over year to $329.0
million, while its operating profit registered a steeper decline of
65% to $14.4 million. The International segment reported net
revenue of $289.7 million, up 14% year over year. The segment’s
operating loss was $5.1 million versus $1.7 million loss recorded
in the year-ago quarter.
The Entertainment and Licensing
segment experienced a 19% year-over-year jump in revenue to $29.3
million. But the segment’s operating profit showed a greater
increment of 42% to reach $7.7 million.
We noticed a 21.3% rise in Hasbro’s
royalty expenses from the prior-year period to $21.3 million.
Product development expenses totaled $44.9 million, down 2.0% year
over year. Advertising expenses decreased 2.3% from the prior-year
quarter to $65.0 million. Selling, distribution and administration
expenses also increased 7.5% to $199.9 million.
Financials
At quarter end, total assets were
$3.88 billion compared with $3.94 billion at the end of the
year-earlier quarter. Hasbro’s long-term debt was $1.40 billion,
almost flat year over year.
Hasbro repurchased a total of
139,656 shares during the quarter at a total cost of $5.0 million.
At quarter-end, $222.3 million remained available in the current
share repurchase authorization.
Outlook
Management expects year-over-year
growth in revenue and earnings per share for 2012 excluding the
impact of foreign currency translation.
Our Take
Hasbro’s strong product line-up
slated for the second half of the year, strategic tie-ups, and its
growing presence in emerging geographical regions bode well for
future growth.
However, the Consensus miss in the
first quarter concern us a bit. Management commented that this
underperformance was expected as it planned for a back-end loaded
year.
Hasbro currently retains a Zacks #3
Rank, which translates into a short-term Hold rating. We are
maintaining our long-term Neutral recommendation on the stock. As a
point of reference, one of Hasbro’s major peers Mattel
Inc. (MAT) missed the Zacks Consensus Estimate in its
first quarter 2012 earnings per share and revenue.
HASBRO INC (HAS): Free Stock Analysis Report
MATTEL INC (MAT): Free Stock Analysis Report
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