Last month, Motley Fool Stock Advisor recommendation Hasbro
Revenues in the U.S. toy segment dropped 17% during the quarter, reflecting declining sales of the BEYBLADE line as well as general softness in brands targeted to boys -- such as GI Joe action figures. Operating profits suffered an even steeper drop, swinging from a $27.9 million gain to a $7.7 million loss. The company cited a shifting sales mix that favored low-margin VideoNow handheld video players.
Elsewhere, things were marginally better. Revenues from games also came in lower but dropped less than half as much as toys. New products, such as interactive DVD-based Trivial Pursuit, helped offset weakness in traditional board games. International revenues, meanwhile, actually rose 6%, though currency translation was responsible for the gain. Still, operating profits in the segment (Hasbro's largest) soared 58%, topping the $100 million mark.
Hasbro's recent problems are indicative of overall softness in the domestic toy business, which fell around 5% last year according to some industry analysts. Competitors such as Leapfrog
Hasbro is also trying to reinvigorate some old favorites. Reportedly, Furby will be reprising his role as a loveable furball. The new-and-improved model will try to recapture some of the popularity of the original, which generated more than $1 billion in sales. Also, in an attempt to cash in on the upcoming culmination of the Star Wars Saga -- Fox's
Hasbro owns some of the world's best-known brands (including Playskool, Milton Bradley, and Parker Brothers), which market a broad array of timeless toys -- honestly, who doesn't love Play-Doh? Furthermore, the company has a promising pipeline of new product development. For long-term investors willing to ride out the current challenges in the retail toy environment, Hasbro might provide some entertainment.
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Fool contributor Nathan Slaughter is not ashamed to admit that he still plays with Play-Doh but owns none of the companies mentioned.