Shares of toy maker Hasbro hit an all-time high Monday after it said strength in its preschool toys helped third-quarter net income rise 3 percent and beat expectations.
The maker of Nerf and Scrabble also is bullish on the number of toys retailers have ordered ahead of the holiday season.
"We're looking for strong sell-through in the fourth quarter, and our inventories support that," said Chief Operating Officer David Hargreaves.
Lower entertainment revenue was offset by strength across many brands, including Nerf, Magic the Gathering and Playskool.
The strong showing is in contrast to rival Mattel Inc.'s third-quarter results,reported Friday. Mattel's net income rose 23 percent but revenue missed expectations because of cautious retail ordering and continued weakness at its Fisher Price unit. Mattel's shares lost 7 percent on Friday.
Hasbro's report come ahead of the crucial holiday season, when toymakers make up to half of their annual revenue.
Net income rose 3 percent to $155.2 million, or $1.09 per share. That compares with $150.4 million, or 99 cents per share, in the same period last year.
Revenue rose 3 percent to $1.31 billion.
Sales of preschool toys rose 9 percent, while revenue from boys' toys rose 4 percent. Girls' product revenue fell 1 percent.
Analysts expected the Pawtucket, R.I.-based company to report net income of $1.04 per share on revenue of $1.29 billion, according to a survey of analysts by Thomson Reuters.
U.S. and Canada revenue rose 4 percent to $825.5 million. International revenue rose 3 percent.
Entertainment revenue dropped 34 percent to $27.5 million, mainly because sales of Transformers and G.I. Joe-related toys declined from a year ago, when both properties were supported by a new movie.
The company said it will record a charge of about 25 cents to 30 cents related to starting up its Hub TV network joint venture, the bulk of which will come in the fourth quarter.
Even with the charge, "We continue to believe we should be able to grow revenues and earnings per share for the full year 2010," CFO Deborah Thomas said.
Brian Goldner said initial results from The Hub, which runs a mixture of Hasbro-created programming and programming from elsewhere, are positive.
The network, a joint venture with Discovery Communications that replaces Discovery Kids, launched Oct. 10 with shows including a family game show "Family Game Night," cartoons based on Hasbro toys including My Little Pony, and syndicated programs such as "The Wonder Years."
"We are very excited about the initial results, the look and feel of The Hub, and the strong programming lineup, which continues to roll out through the quarter," Goldner said.
Shares rose $1.73, or 3.8 percent, to $46.81, earlier peaking at a record high of $48.78. The stock had traded between $26.82 and $46.57 during the past 52 weeks.