Toy maker Hasbro Inc. reports earnings for the fiscal second quarter on Monday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Toy makers are facing weaker demand from consumers cutting back on discretionary purchases amid high food and gas prices and declining home values. Furthermore, costs for petroleum and other raw materials used in toys are increasing.
During the quarter, the world's second largest toy maker named its chief operating officer Brian Goldner as chief executive, taking over from retiring CEO Alfred Verrechia. Goldner was replaced as COO by David Hargreaves, who continues to serve as chief financial officer.
As demand for traditional toys loses ground to electronic gadgets and video games, Pawtucket, R.I.-based Hasbro has been focusing on expanding its traditional toy brands into entertainment, publishing, promotions and digital arenas.
During the quarter, three movies came out that Hasbro is making toys for: "Iron Man" and the new editions of the "Indiana Jones" and "The Hulk" franchises.
BY THE NUMBERS: Analysts polled by Thomson Financial, on average, expect a profit of 22 cents per share on revenue of $675.4 million.
ANALYST TAKE: Lehman Brothers analyst Felicia R. Hendrix wrote in a note to investors on Tuesday that Hasbro will likely report earnings that match analyst estimates.
Hendrix expects that toys related to "The Transformers" movie released last year will be the largest contributor in the category. She rates the company "Equal weight."
BMO Capital Markets analyst Gerrick L. Johnson wrote in a note Wednesday that while first-quarter results beat expectations by a wide margin, the quarter was helped by seasonal restocking of Transformers toys after a successful holiday season, and may also have been boosted by initial shipments of Indiana Jones and Iron Man toys.
"For the second quarter we do not expect the same kind of seasonal restocking, particularly with overall retail sales appearing sluggish," wrote Gerrick, who rates the company "Market Perform."
WHAT'S AHEAD: After the seasonally slowest second quarter, analysts are looking to see if sales of Hasbro's GI Joe line remains strong.
STOCK PERFORMANCE: Shares rose 39 percent during the quarter beginning April 1.
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