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Hasbro falls into red as overall sales slip

Company loses $2.6 million in first quarter

Weaker than expected demand for its toys caused Hasbro to record a $2.6 million loss during the first quarter — a figure the toy maker is looking to reverse significantly thanks to tie-ins with Marvel’s “The Avengers,” Sony’s “The Amazing Spider-Man,” Paramount’s “G.I. Joe: Retaliation” and Universal’s “Battleship” this summer.

Sales during the three-month period that ended April 1 dipped 3% to $648.9 million, and were particularly hit hard in North America where revenue was down 16%.

Entertainment and licensing revenue surged 19% to $29.3 million on the sale of TV programming in the U.S. and abroad and continued box office coin from “Transformers.” Showbiz profits rose to $7.7 million from $5.4 million.

The loss during the quarter, compared to a $17.2 million profit in the year-ago quarter, included $11 million in severance costs from laying off 170 staffers in March by the nation’s second largest toymaker.

The company is expected to launch marketing campaigns around toys that will hit stores in connection with upcoming films.

The $200 million-budged “Battleship,” which Hasbro is co-producing, is seen as a way to breathe new life into the boardgame, while the “G.I. Joe” sequel will help the company launch new lines of action figures around the property the way “G.I. Joe: The Rise of Cobra” did in 2009.

“Battleship” already has crossed the $130 million mark from its overseas release over the past 12 days before its Stateside bow May 18.

Company also will relaunch Furby, a big seller in 1999, as well as ’80s property Lazer Tag.

It also will introduce more advanced versions of its boardgames (such as Monopoly, the Game of Life, Twister, Candy Land, Risk and Scrabble) that rely on technology to attract consumers as a way to prop up its games segment, which includes Milton Bradley, Parker Brothers and Wizards of the Coast. Earnings there fell 9% to $182 million in the quarter.

Hasbro CEO Brian Goldner wants to stabilize that part of its biz this year and grow the segment in 2013.

Company’s first online game with Zynga bows in the fall, as part of a multi-year deal with the social gamemaker.

Because Hasbro didn’t co-produce a film last year, “it’s not surprising that ‘Transformers’ was down in the boys category,” Goldner said. However, licensing revenue for the brand did grow year-over-year, mostly overseas. “Transformers” is the basis of a new theme park attraction opening at Universal Studios Hollywood in May.

Hasbro has long believed that TV shows “drive merchandise sales,” and as part of that strategy, inked a multi-year distribution deal with Netflix earlier this month. As a result, Hasbro struck a licensing pact to make 10 Hasbro Studio shows, including “Transformers Prime” and “My Little Pony,” available to for streaming.

But its main focus is on kids cable channel the Hub, its joint venture with Discovery Communications, which saw a 32% uptick in its first-quarter ratings among kids 2 to 11. “Transformers Rescue Bots” and “My Little Pony: Friendship is Magic” ranked among the top two series with that demo during the period.

It will use a new Hub series to promote Kaijudo from Wizards of the Coast in May. “Transformers Prime” airs in more than 160 countries, pushing the “Transformers” franchise without a major pic on the bigscreen.

“Our approach to television programming has been an all-screen strategy from the start, and this agreement dramatically expands the visibility and distribution of our shows,” Goldner said.

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