February 9, 2015 / 11:54 AM / in 3 years

Transformers, Marvel toys drive Hasbro's profit beat

(Reuters) - Hasbro Inc (HAS.O) reported a better-than-expected quarterly adjusted profit, helped by demand for its toys for boys based on Transformers movies and characters from Marvel comics in the holiday shopping season.

A Transformers statue stands on display at the Hasbro booth during the 2014 Comic-Con International Convention in San Diego, California July 25, 2014. REUTERS/Sandy Huffaker

Shares of the company, known for its My Little Pony toys and movie-based action figures, rose as much as 6.6 percent in early trading.

Sales of toys for boys, Hasbro’s largest business, rose about 21 percent in the fourth quarter ended Dec. 28.

Hasbro’s results were comparatively stronger than those of larger rival Mattel Inc (MAT.O), which last month posted its fifth straight fall in worldwide quarterly sales.

Hasbro’s total revenue rose 1.3 percent to $1.30 billion.

If not for the stronger dollar, revenue would have increased 7 percent, the company said.

Mattel reported a 6 percent fall in sales to $1.99 billion in its latest quarter.

From 2016, Mattel will lose its license to make Walt Disney Co (DIS.N) Princess dolls, including those based on the blockbuster movie “Frozen”, to Hasbro. Hasbro said on the earnings call that it began production of the dolls.

Hasbro’s gross margin rose 2.3 percentage points to 60.2 percent, Stifel, Nicolaus & Co analysts wrote in a note. The gross margin growth was helped by sales of franchise brands such as Transformers, the company said.

The company said inventory levels were down 2.6 percent at the end of the quarter. They had been up 10.4 percent a year earlier.

Hasbro raised its quarterly dividend to 46 cents per share from 43 cents and authorized a new $500 million share repurchase program.

The second-largest U.S. toymaker, which gets half of its revenue from international markets, said a strong dollar reduced fourth-quarter revenue by $75.4 million.

The dollar .DXY has surged about 20 percent against a basket of major currencies since May.

Sales in the games division, which makes Monopoly and The Game of Life board games, fell 4.4 percent, while sales in the girls division fell 10.4 percent.

Net income attributable to Hasbro rose about 31 percent to $169.9 million, or $1.34 per share, in fourth quarter.

Excluding items, Hasbro earned $1.22 per share.

Analysts on average had expected a profit of $1.21 per share on revenue of $1.33 billion, according to Thomson Reuters I/B/E/S.

Hasbro shares were up 6 percent at $59.16 in morning trading.

Reporting by Shailaja Sharma in Bengaluru; Editing by Sriraj Kalluvila

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