Like its own line of Transformers, there's more to Hasbro
Clearly, a lot of factors are working in the company's favor. Its five-year licensing deal with Marvel
Then we had the box-office success of Transformers. That's an important win for Hasbro, because it pays out a much smaller royalty rate there than it does on third-party deals such as those with Marvel and the Star Wars franchise.
Shipments of Transformers toys are picking up in the current quarter, setting the perfect tone for Hasbro as a big winner in the upcoming 2007 holiday shopping season.
Hasbro has had a great start to 2007. The company also blew analysts away with its first-quarter report three months ago. It expects year-over-year growth in the seasonally potent second half of the year, though clearly not as heady as investors have seen through the first six months.
The encouraging aspect of all this growth is that the company is also working off fatter margins. Revenues were up 24% in North America and 49% elsewhere, but operating profits grew even faster. That is pretty impressive, especially since the 37% boost in domestic operating profits came despite a $10.4 million hit over its Easy-Bake Oven recall.
Hasbro's got the hot toys right now. It is doing better than rival Mattel
The overall strength in the industry is good to see. Instead of watching retailers stock up on toys in the third and fourth quarters in anticipation of the holidays, bellwethers such as Hasbro are doing just fine in what has traditionally been the sleepy half of the year.
So thank you, Optimus Prime. You have managed to help transform the toy industry into something even bigger and more powerful.
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Longtime Fool contributor Rick Munarriz wonders who will have the hot toys for the 2007 holiday season. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy, batteries not included.