February 11, 2020 / 11:48 AM / 12 days ago

Lightsabers and princesses star in toymaker Hasbro's holiday quarter

(Reuters) - Stormtroopers, lightsabers and Elsa dolls powered Hasbro Inc’s (HAS.O) holiday-quarter profit as toy demand was spurred by the release of new Star Wars and Frozen movies, sending the company’s shares 7% higher.

Lower costs during the quarter, mainly due to a decrease in ad spending, also helped the company beat profit estimates for the period.

“The Rise of Skywalker”, the final installment in the over four-decade old Star Wars saga, has grossed over $1 billion worldwide since its December release and was a boon for Hasbro, which has the license to make toys based on the franchise’s collection of droids and otherworldly characters.

Although the movie was panned by several critics, the bump in Hasbro’s revenue from sales of Star Wars action figures and vehicles showed just how important big entertainment properties have become to toymakers.

Revenue from Hasbro’s partner brands unit, which includes sales of toys based on the Star Wars and Frozen movies, rose nearly 50% to $408.5 million in the fourth quarter.

“It was a crapshoot going into the fourth quarter. All bets were off considering Hasbro really missed the mark in the prior quarter,” said James Zahn, senior editor at trade magazine “The Toy Book”.

He added sales were also helped by pre-orders for toys based on “Baby Yoda”, a character from the “The Mandalorian” series on Disney+ that has become a viral sensation on social media.

Chief Executive Officer Brian Goldner said Disney+, the streaming site launched by Walt Disney Co (DIS.N) last November, will give Hasbro a lift this year.

“We’re seeing great impact from Disney+. The fact that the library of Disney Princess films are now available together only gives us more opportunity to continue to work with Disney to bring to life those characters in product,” Goldner said.

Sales were also driven by the November release of “Frozen 2”, which re-energized demand for Hasbro’s dolls based on the franchise’s main characters Elsa, Anna and Olaf.

Costs fell to 40.4% of total revenue from 43.3% a year earlier, helped by an about 30% cut in advertising spending.

FILE PHOTO: A Transformers statue stands on display at the Hasbro booth during the 2014 Comic-Con International Convention in San Diego, California July 25, 2014. REUTERS/Sandy Huffaker/File Photo

Net income rose to $267.3 million in the quarter ended Dec. 29, bumped up by $102.5 million in foreign currency gains.

Excluding items, the company earned $1.24 per share, above analysts’ average estimate of 91 cents, according to IBES data from Refinitiv.

Net revenue rose 2.8% to $1.43 billion, marginally missing estimates of $1.44 billion.

Reporting by Uday Sampath and Praveen Paramasivam in Bengaluru; Editing by Sriraj Kalluvila and Saumyadeb Chakrabarty

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