Toymaker and dividend-growth gem Hasbro (HAS) reported better than expected earnings and revenue that was in-line with consensus estimates. The firm saw revenue remain roughly flat at $1.35 billion but grow 1%, if adjusted for negative currency impacts. Earnings per share fell 2% to $1.24. We thought results might be a little stronger than reported after Mattel's (MAT) strong earnings, but we still think the quarter was solid. We're also big fans of its dividend, as we outline in this article here.
Revenue in the US grew only 1% to $774.5 million, but operating profits surged 20% year-over-year to $154.2 million. The firm's focus has clearly yielded positive results. Net of currency impacts, international toy revenues were up 1% as well, though down 7% on a reported basis. Latin America grew 9%, but the strong performance was cancelled out by weakness in Europe and Asia Pacific. Operating profit declined 15%, but again, this was mostly a result of currency.
Much like what we saw from Mattel, girls toys significantly outperformed the growth in boys. Girls toys grew 17% year-over-year thanks to strength from the re-introduction of Furby, as well as strong sales from My Little Pony. Still, the $303 million in sales from girls toys lags behind the $471 million in sales from boys toys during the quarter, though sales of the latter contracted 12% year-over-year. As we assumed, the Avengers line performed incredibly well, but the company is struggling as it laps huge quarters from Transformers. Games revenue remained roughly flat at $366 million. Though many have assumed the transition to iPads and console gaming would destroy the traditional games business, we view it more as an annuity and think the firm will continue to add incremental change to spur sales.
Preschool revenue declined 5% to $206 million, but we think this segment has a strong future, particularly in the US. The echo boomers, sons and daughters of baby boomers, are just beginning to enter their late 20's-the new normal for marriage and child bearing in the country. Though birthrates might be lower in the future, as some polls have indicated-we have no insight either way-these parents will still create a huge generation in need of preschool toys. Hasbro's Playskool line, Sesame Street Partnership, and Play-Doh are well positioned to ride the wave.
Overall, Hasbro's third quarter was solid, and the decline in toys that market participants have been expecting since the creation of Super Nintendo (years and years ago) continues to overblown, in our view. We still love the firm's 3.7% annual dividend yield, and we hold shares in the portfolio of our Dividend Growth Newsletter.
Additional disclosure: HAS is included in our Dividend Growth portfolio.