Toy maker Hasbro Inc. Monday said fourth-quarter profit rose 15 percent on strong demand for its Star Wars products, but warned of tough comparisons this year as sales of the line are expected to decline.
The company also reported revenue that missed Wall Street estimates as game sales were weak.
Star Wars products, which include lightsabers and action figures, accounted for 16 percent of revenue in 2005. Hasbro, whose shares were nearly unchanged, expects sales of the category to fall since the last “Star Wars” movie was released last spring.
Gary Cooper of Bank of America said Hasbro faced a challenging year, saying Star Wars revenue could fall by $300 million in 2006.
The results come a week after larger rival Mattel Inc. reported lower quarterly profit on falling sales in its Barbie and Hot Wheels brands.
Hasbro, known for brands such as Playskool and Milton Bradley, reported net income of $94.3 million, or 48 cents per share, compared with $81.9 million, or 44 cents per share, a year earlier.
Excluding taxes on repatriation of foreign earnings, the company said earnings were 61 cents per share. Analysts on average were expecting 58 cents, according to Reuters Estimates.
Quarterly revenue rose to $1.07 billion, up from $1.06 billion a year ago, but lower than analysts’ targets of $1.11 billion.
Hasbro said revenue in the U.S. toy segment, which includes the Star Wars and Furby lines, increased to $305.6 million from $263.7 million. But games segment revenue fell to $235.8 million from $270.3 million on lower trading card and board game volume.
“While I am pleased with our overall performance, in particular our Star Wars product line, the games segment performance was below our expectations and clearly there is opportunity for improvement this year,” Chief Executive Alfred Verrecchia said in a statement.
Ahead of the earnings release, analysts predicted game segment sales would decline, in part because of a weak performance in trading cards.
On a conference call with analysts, Hasbro said its “plug and play” games also performed well below targets.
In anticipation of declining Star Wars toy sales, Verrecchia outlined Hasbro’s extensive line of “boy” toys, like G.I. Joe and Transformers.
Hasbro also highlighted its licensing deal with Marvel Entertainment Inc. , which gives it the right to produce toys and games based on media company’s stable of more than 5,000 characters. Hasbro said it could possibly start shipping Marvel products in the back half of 2006.
“We are not a one-product company,” Verrecchia said on the call.