Hasbro to close gap with Mattel
Sequels to Star Wars, The Avengers and Jurassic Park movies are expected to boost Hasbro Inc’s sales this year, helping the toymaker to further narrow the lead of Mattel Inc, its bigger rival.
Hasbro’s revenue increased 4.8% in 2014, while Mattel’s fell 7%, shrinking the gap between the two biggest US toymakers to $1.74 billion from $2.4 billion in 2013.
The margin could grow smaller over the next two years, analysts said, as Mattel faces declining demand for its Barbie dolls and Fisher-Price preschool toys.
“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% against a basket of major currencies since May.
Mattel’s interim chief executive Christopher Sinclair said last month the company must move with a “sense of urgency” to connect with young customers.
Needham & Co’s 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 it takes the license from Mattel to make Walt Disney Co’s Princess dolls, including those based on the movie Frozen.
“The launch of the Disney Princess doll lines will contribute hundreds of millions of dollars in sales to Hasbro,” Goldner said in an interview on Monday.
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% to $1.30 billion in the fourth quarter as sales of toys for boys, its largest business, rose about 21%.
If not for the stronger dollar, revenue would have risen 7%, Hasbro said.