The Force is with Hasbro as movie licenses power sales

Reuters News
Posted: Jul 20, 2015 6:45 AM

By Yashaswini Swamynathan

(Reuters) - From T-Rex to Yoda, Hasbro <HAS.O> has its toy cupboard full for the next two years.

Thanks to licenses with studios rolling out movies based on blockbuster franchises such as Jurassic Park, Star Wars and X-Men, Hasbro is on track for record sales this year and the next.

Shares of the second-biggest U.S. toymaker after Mattel <MAT.O> hit a record high of $42.55 on Monday as the company's quarterly profit and sales blew past estimates.

While Mattel has struggled to boost flagging sales of its iconic Barbie dolls, Hasbro's tie-ups with movie studios have been a money-spinner for the Monopoly board game maker.

The narrowing gap between the top two players reflects in their stock prices: Mattel has lost a third of its value in the past year, while Hasbro has surged 57 percent.

MKM Partners' Eric Handler said the recent release of "Jurassic World" and the relaunch of the Star Wars franchise later this year promise record sales for Hasbro.

"If you rely on a movie franchise, Star Wars is as big as it can get," Handler said.

"Star Wars: Episode VII - The Force Awakens" hits theaters in December. X-Men releases next May.

While Hasbro already has licenses from Walt Disney Co <DIS.N> for Star Wars and Marvel's action heroes, it recently won a key license from the studio to make toys based on Disney's princesses from 2016.

Sales at Hasbro's boys business, which includes Star Wars, Jurassic World and Marvel's Avengers, rose 1 percent in the second quarter ended June 28, more than offsetting a 22 percent decline in the girls toys business.

Stephanie Wissink of Piper Jaffray said the latest Disney deal promises $400 million in sales for Hasbro next year.

According to Wissink's calculations, Hasbro's annual sales are expected to rise 3 percent this year and 10 percent in 2016. Wall Street analysts on average expect a growth of 1.2 percent for 2015 and 8.6 percent for 2016.

Star Wars is likely to make $750 million a year for Hasbro and Marvel $300 million, Wissink said, adding that she expects Hasbro's sales to top Mattel's in about five years.

Net income rose to 33 cents per share, beating the average analyst estimate of 29 cents per share.

Net revenue fell 4 percent to $797.7 million. Excluding the impact of the strong dollar, it rose 5 percent. Analysts on average had expected $773.1 million.

(Additional reporting by Nayan Das; Editing by Savio D'Souza and Saumyadeb Chakrabarty)