Let's Play a Game With Toymakers
By
Rick Aristotle Munarriz
October 20, 2008
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How well do you know Hasbro (Nasdaq: HAS) and Mattel (NYSE: MAT)? Let's see whether you can tell them apart.
- One of them puts out the Clue sleuthing game. The other can't seem to buy a clue.
- One of them puts out the Sorry! board game. The other had better start learning how to apologize.
- One of them was able to skirt the nasty wave of Chinese toy recalls. The other did not.
- One of them has now beaten adjusted earnings expectations in each of the past six quarters. The other one is named Mattel.
It's hard to avoid comparing Hasbro to Mattel; they're the country's two leading toymakers. Comparisons get even more tempting when you consider that both companies reported their quarterly results this month.
Mattel was able to grow its sales and earnings slightly before heading into the telltale holiday shopping season. Unfortunately, generating a profit of $0.66 a share stings when analysts were hoping for $0.71.
Hasbro fared better, with healthier bottom-line growth. Hasbro's third-quarter profit of $0.89 a share exceeded expectations of $0.86.
Hasbro is rocking. Its in-house properties such as Transformers, Nerf, and Playskool are doing well. The company has also been able to score lucrative licensing deals for hot playthings through Star Wars and Marvel (NYSE: MVL).
Hasbro and Mattel remain the industry bellwethers, with wider product lines than niche specialists such as RC2 (Nasdaq: RCRC), with its hands-on playthings, and LeapFrog (NYSE: LF), with its kiddie electronics, offer. JAKKS Pacific (Nasdaq: JAKK) has already announced a pair of acquisitions this month, but it's still ringing up roughly a fifth of the revenue that Mattel and Hasbro are scoring.
The upcoming holiday season will be critical for the industry. Will cash-strapped parents hold back on their gift-giving? Can Mattel's Barbie get back on track, at a time when even Build-A-Bear Workshop (NYSE: BBW) is shuttering its "friends 2B made" line of customizable dolls? Can Hasbro go for seven market-humbling quarters in a row?
It's a game we play every three months, but the game never gets old.
More holiday cheer:
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