After NPD reported solid toy sales during December, we thought the holiday season might be relatively strong for the major toymakers—including Lego, Hasbro (click ticker for report: ), and Mattel (click ticker for report: ). However, Hasbro announced last week that its fourth quarter revenue will be approximately $1.3 billion, below the consensus expectation of $1.4 billion. Earnings, net of restructuring charges, will be $2.73-$2.75 per share, well below the consensus estimate of $2.85 per share.
We won’t know until the firm announces its results in February what caused the weakness, but we like the firm’s decision to reduce annual operating expenses by $100 million over the next three years.
Since December seemed like a relatively strong month for the toy industry as a whole, we assume the season may have got off to a sluggish start. We’ll be monitoring the results of the company when it reports final results, but we aren’t too worried at this point. Excluding foreign exchange headwinds, the firm’s sales were roughly flat compared to the fourth quarter of 2011, and we think the company is doing a good job of maintaining sales as it battles macroeconomic headwinds and changing industry dynamics.
At this point, we think Hasbro remains a solid dividend growth idea, so we won’t be removing shares from the portfolio of our Dividend Growth Newsletter.
Please click the following link for our Dividend Report on Hasbro: