A fun quarter for Hasbro; stock jumps

No. 2 toymaker cites strong sales of its pre-school toys, Marvel-licensed products and Transformers products for surge in first-quarter profits, revenue; stock jumps

By Parija B. Kavilanz, CNNMoney.com senior writer

NEW YORK (CNNMoney.com) -- Hasbro Inc. on Monday posted a surge in its first-quarter profits and sales versus a loss from a year ago, driven by sales of its Playskool pre-school toys, Marvel-licensed toys and its Transformers toys.

Hasbro (Charts), the No. 2 toymaker after Mattel (Charts, Fortune 500), reported net income of $32.9 million, or 19 cents a share for the quarter, compared to net loss of $4.9 million, or 3 cents a share last year.

Sales came in at $625.3 million, up 34 percent from a year ago.

Hasbro shares jumped more than 8 percent in morning trading on the New York Stock Exchange. The stock is up more than 11 percent so far this year and about 45 percent over the last 12 months.

Analysts, on average, expected the company to post flat profits for the quarter and sales of $508 million, according to First Call.

In its earnings release, Hasbro said sales were mainly driven by its Marvel-licensed products as well as core brands that included "Littlest Pet Shop," "Nerf," "Play-Doh," "My Little Pony," "Playskool," "Transformers" and board games.

Hasbro's strong start to the year bodes well for the company. The first quarter typically is among the least important selling periods for toy companies, with fourth-quarter holiday shopping period accounting for as much as 90 percent of toymakers' profits and sales.

Big movie licenses = big sales?

Toy industry analysts say Hasbro has a slew of licensed toys hitting stores in the summer for three of this year's widely anticipated releases which should help spur sales of its products throughout the year.

Hasbro last January inked a five-year licensing deal for more than 5,000 Marvel superhero characters, including the "classic" comic books and product lines inspired by Marvel-themed movies.

The movies includes Spider-Man 3, hitting theaters next month; Transformers, the live-action movie based on its own line of action figures; and the new Fantastic Four movie coming out in June.

However, during the company's conference with analysts to discuss the results, Hasbro executives preferred to be cautiously optimistic about the impact of the new movie-licensed products on sales and profits in the remainder of the year.

"Things are going well. I feel good about the business going forward," CEO Al Verrecchia said during the call which was monitored via Web cast in New York. "But the two major movies that we have products for haven't been released yet. It's good to be ahead [referring to first-quarter results] but we have to finish the year strong to win the game."

The company's CFO David Hargreaves echoed that sentiment.

"We are very pleased with our first-quarter performance. This has made us more confident to meet our full-year goals. But this is only the first-quarter. So it's premature to change out [financial] expectations for the year," Hargreaves said during the call.

Hargreaves said the toymaker typically doesn't offer financial guidance. First Call currently expects the company to report a full-year profit of $1.62 a share for its current fiscal year on sales of $3.4 billion.

So far, Hasbro said sales of toys and other entertainment products tied to Spider-Man 3 "far exceeded" expectations during launch week at stores compared to the retail launch for its Spider-Man 2 products.

Executives also talked up demand for new Star Wars products which commemorate 30 years of the film franchise.

Regarding Transformers, the company said it expects to start shipping products to stores in the second quarter, a few days before its debut in early July.

Although Hasbro owns the "Transformers" brand, Hargreaves clarified that the toymaker did not finance the movie from DreamWorks Pictures and Paramount and therefore will not get a percentage of the gross sales. Hasbro's revenues from the movie are tied only to product sales. Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.