By Justin Grant
NEW YORK (Reuters) - Hasbro Inc
Fourth-quarter earnings for the second-largest U.S. toy maker rose to $133.7 million, or 84 cents a share, from $108.3 million, or 62 cents a share, a year earlier.
Quarterly sales rose 16 percent to $1.3 billion.
Analysts on average were expecting profit of 81 cents a share on sales of about $1.22 billion, according to Reuters Estimates.
"On a global basis, our boys, girls, preschool, and games and puzzles categories all performed well," Chief Executive Alfred Verrecchia said on a conference call.
BMO Capital Markets analyst Gerrick Johnson said the results were in line with Wall Street's expectations.
"I'm looking at that 28 percent increase in inventory and 60-basis-point decline in gross margin and wondering what happened there," Johnson said.
The results come two weeks after industry leader Mattel Inc
Sales during the quarter rose 8 percent at Hasbro's North American division, although operating profit fell 22 percent.
Hasbro's international segment sales, meanwhile, climbed 29 percent as operating profit rose 40 percent.
The fourth quarter is the most important time of year for toy companies because it includes the holiday shopping season, when the industry rings up nearly half its annual sales, according to market research firm NPD Group.
RISING COSTS
Looking ahead, Hasbro said costs will climb this year due to the rising price of labor and commodities, the revaluation of the Chinese currency, and product testing.
"So clearly there will be some price increases this year," Verrecchia said. We'll continue to look to improve our efficiencies in the supply chain."
Meanwhile, the company will look to the Transformers animated television series to help one of its key product lines maintain momentum this year until the movie sequel in 2009.
Last year, toys based on the Transformers film helped drive its boys division.
Later this year, the company will roll out toys tied to the films "Iron Man," "The Incredible Hulk" and "Indiana Jones and the Kingdom of the Crystal Skull."
Hasbro's stock was trading at 12.71 times 2008 earnings, a premium to rival Mattel, which was trading at a multiple of 12.51 times 2008 earnings.
Hasbro's shares were up 53 cents, or about 2 percent, to $26.40 in morning trading on the New York Stock Exchange after hitting $26.96 earlier in the session.
(Editing by Dave Zimmerman)
