NEW YORK (AP) — The toys wars are heating up, with Hasbro planning to beef up spending on advertising after reporting that its third-quarter results fell by 4 percent.
Hasbro, whose toys include My Little Pony, Transformers and Scrabble, said Monday that its results were hurt by weakness in toys for boys and preschool and the stronger U.S. dollar. But the Pawtucket, R.I.-based company's adjusted results topped Wall Street's forecasts on Monday. And Hasbro remains confident heading into the critical holiday season, which is when toy makers can earn up to 40 percent of annual revenue.
Hasbro is optimistic despite that the holidays are expected to be a tough battleground for toy makers because retailers are ordering inventory more cautiously. In addition, retailers including Wal-Mart, Kmart and Toys R Us have beefed up layaway and reservation services to encourage shoppers to buy toys early in the season, meaning they might be scarce later on.
Chief Financial Officer Deborah Thomas said Hasbro plans to boost toy sales during the holiday season "with a significant increase in marketing support in an environment of significantly lower U.S. retail inventory." That includes spending of 30 percent to 40 percent more, in terms of dollars, than it did a year ago.
"The team has done a great job of not only looking at traditional media but digital and social media and you'll see our brands showing up in all those places — everywhere consumers are interacting with brand," CEO Brian Goldner said during the call.
For the three months ended Sept. 30, Hasbro Inc. earned $164.9 million, or $1.24 per share. That compares with $171 million, or $1.27 per share, a year earlier.
Removing the impact of the stronger dollar, earnings were $1.28 per share. A reduction in the number of outstanding shares through repurchases helped boost earnings per share by about 2 cents. Analysts, on average, expected profit of $1.20 per share, according to FactSet.
Revenue slipped 2 percent to $1.35 billion from $1.38 billion. Revenue totaled $1.39 billion excluding unfavorable foreign exchange rates. Wall Street forecast $1.38 billion, on average.