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UPDATE 4-Toymaker Hasbro to further close gap with Mattel in 2015
February 9, 2015 / 1:06 PM / 3 years ago

UPDATE 4-Toymaker Hasbro to further close gap with Mattel in 2015

(Adds details, background; updates shares)

By Shailaja Sharma

Feb 9 (Reuters) - Sequels to “Star Wars”, “The Avengers” and “Jurassic Park” movies are expected to boost Hasbro Inc’s sales this year, helping the toymaker further narrow the gap with Mattel Inc, its bigger but struggling rival.

Hasbro’s revenue increased 4.8 percent in 2014, while Mattel’s fell 7 percent, narrowing the annual sales gap between the two biggest U.S. toymakers to $1.74 billion from $2.4 billion in 2013.

The gap could narrow further over the next two years, analysts said, as Mattel struggles with falling demand for its Barbie dolls and Fisher-Price preschool toys.

Hasbro’s shares rose as much as 8.8 percent to a record high of $60.66 on Monday.

“Exclusive of currency, Hasbro should be able to show an increase in 2015 (sales), and that’s not obvious for Mattel at all,” Needham & Co analyst Sean McGowan said.

Hasbro and Mattel have said a strong dollar would remain a headwind in 2015. The dollar has surged about 20 percent against a basket of major currencies since May.

Mattel’s interim CEO Christopher Sinclair said last month the company must move with a “sense of urgency” to connect with young customers.

McGowan said Hasbro CEO Brian Goldner’s strategy of making the company’s brands relevant in multiple categories was working.

Hasbro will notch another victory next year when Mattel loses its license to make Walt Disney Co’s Princess dolls, including those based on the movie “Frozen”.

Over the past few years, the box office success of “Transformers” movies and films based on Marvel Comics characters such as Spider-Man and Iron Man have made Hasbro’s action figures popular.

The company also has a deal with Discovery Communications Inc for shows based on its brands such as My Little Pony.

It could take until 2016 or even 2017 for Mattel to start showing sales growth, Piper Jaffray analyst Stephanie Wissink said.

The sequels of “Jurassic Park” and “The Avengers” are expected in the first half of this year, while the new “Star Wars” movie is expected in December. Hasbro starts shipping toys 4-8 weeks before a movie’s launch.

The company’s revenue rose 1.3 percent to $1.30 billion in the fourth quarter as sales of toys for boys, its largest business, rose about 21 percent.

If not for the stronger dollar, revenue would have risen 7 percent, Hasbro said. Europe, Asia Pacific and Latin America account for half of its total revenue. (Editing by Sriraj Kalluvila and Kirti Pandey)

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