Brocker.Org: A Tale of Two Toy Makers: Mattel and Hasbro

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Hasbro Inc. (HAS) proceeds to woo the Avenue as its new electronic concentration drives far better-than-expected earnings, propelling its shares to document highs Monday morning. As the Pawtucket, R.I.-based board recreation and enjoyment enterprise succeeds in its extensive-phrase prepare to develop into additional than just a toy enterprise, its primary rival, El Segundo, Calif.-based Mattel Inc. (MAT) disappoints with one more earnings skip in Q1. Traders are concerned that the struggling toy maker is hung up on its close to sixty-12 months-previous Barbie line as it struggles to acquire traction with new buyers.

Hasbro Inc.

America’s No. 2 toy maker saw its shares leap Monday, up about four% in early buying and selling soon after submitting initially-quarter earnings that surpassed the Street’s estimates. Hasbro documented earnings of $.forty three for every share on product sales up 2.2% 12 months-above-12 months (YOY) to $849.seven million, exceeding the Street’s forecasts for EPS of $.38 with product sales down .five% to $827.three million. Demand from customers for electronic game titles worked to virtually double income for the company’s enjoyment and licensing business, which saw revenue leap 24% in Q1.

“Over the coming quarters, we are supporting sizeable new initiatives which includes significant theatrical films for both of those Franchise and Associate Brands,” explained Hasbro’s Chief Executive Officer (CEO) Brian Goldner. (See also: Hasbro Wishes Its Have Film Universe.)

Mattel Inc.

The owner of Barbie, Fisher-Cost and American Lady brands saw its shares plummet 13.six% on Friday soon after reporting a broader-than-expected decline in the recent quarter. Mattel’s Q1 decline practically doubled the Street’s estimates as product sales dipped 15.four%, attributed to lowered demand by merchants for its main brands and big discounts supposed to go inventory soon after a specially weak vacation year. Mattel documented a decline of $.32 for every share on revenue of $736 million, falling quick of an expected decline of $.seventeen for every share on revenue of $805 million.

While analysts continue to be skeptical of Mattel’s larger sized turnaround, UBS reiterated a purchase score on MAT shares, anticipating brands these as Barbie and Fisher-Cost, which weighed heavily on product sales in the quarter, to boost Mattel in Q2. UBS says that product sales for Barbie, Incredibly hot Wheels and Fisher-Cost are up in the mid to high solitary digits.

“These are incredibly sturdy numbers, in our view—hard to reconcile with overall marketplace trends at retail, and with double-digit decrease in shipment, perhaps setting up for good ship-in bump in Q2 underneath main brands, outside of enjoyment slate-tied segments.” (See also: UBS: It’s About Time for a Mattel-Hasbro Merger.)

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