Hasbro quarterly revenue falls short

NEW YORK (Reuters) - Hasbro Inc reported a sharper-than-expected sales decline on Monday, but beat profit expectations on cost cuts and said new projects should help it do better in the second half of the year.

The No. 2 U.S. toymaker said sales in its boys' toys unit fell from last year when it recorded strong sales tied to the Hollywood movies "Transformers: Revenge of the Fallen" and "G.I. Joe: The Rise of Cobra."

The company said revenue and earnings per share should rise this year -- barring further declines in foreign exchange, consumer spending and the world economy -- and that it would benefit from new projects including a new children's television network called "The Hub," a joint venture with Discovery Communications Inc .

Home to toy brands and games such as Playskool, Monopoly, and Strawberry Shortcake, the company is creating Hasbro Studios to produce television programing for The Hub.

Hasbro's second-quarter net profit rose to $43.6 million, or 29 cents a share, from $39.3 million, or 26 cents a share, a year earlier. Analysts on average were expecting earnings of 24 cents a share, according to Thomson Reuters I/B/E/S.

Sales fell 7 percent to $737.8 million, missing the analysts' average forecast of $748.3 million. The company curtailed advertising and other costs to offset the weakness.

U.S. and Canadian net revenue fell to $444.5 million from $490.9 million, mainly because of boy toy segment.

Hasbro is not the only toymaker to report a tough quarter. Last week, Mattel posted a smaller-than-expected quarterly profit as a weakening euro offset strong Hot Wheels sales and the boost it got from "Toy Story 3" merchandise sales.

Last month, Hasbro denied a Wall Street Journal report that it was for sale. The company held talks with Providence Equity, a buyout and investment firm that, like Hasbro, is based in Rhode Island, sources said at the time.

Some analysts still consider it an attractive buyout candidate for an entertainment company. Hasbro holds licenses to make merchandise tied to upcoming movies such as "The First Avenger: Captain America" and "Spider-Man 4."

Last December, Hasbro signed a 10-year deal to make and sell toys and games based on characters in the American children's television series "Sesame Street."

Hasbro's stock, which has risen almost 23 percent in the past 6 months, was down 1.3 percent in pre-market trading.

(Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn and Robert MacMillan)

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