Without a film or TV show to promote its top properties, Hasbro saw sales of some of its key toy lines decline during the third quarter.
The boys segment, in particular, was off 12% as toys tied to “Transformers” and “Beyblade” dragged down sales to collect $471 million.
The girls segment, however, was up 17%, earning $302 million, lifted by My Little Pony, One Direction boy band dolls, Furby and Easy-Bake ovens. The recently relaunched Furby line enjoyed a 17% rise in revenue.
Hasbro’s “G.I. Joe” sequel bows next March, but it will be years before a fourth “Transformers” film (again via Paramount) or film adaptations of “Monopoly,” “Ouija,” “Action Man,” “Stretch Armstrong” or “Hungry Hungry Hippos” hits theaters. The company recently teamed with Emmett/Furla Films to get three projects off the ground as co-productions within the next two years (Variety, Oct. 4).
Without such high-profile projects, Hasbro said it plans to increase its marketing budget by around 40% across television, social media and other online avenues during the key holiday shopping season, when toymakers generate much of their revenue.
Increased spending will take placed in what Hasbro CFO Deborah Thomas called “an environment of significantly lower U.S. retail inventory.”
“The team has done a great job of not only looking at traditional media but digital and social media, and you’ll see our brands showing up in all those places — everywhere consumers are interacting with brand,” CEO Brian Goldner said during a call with press and analysts.
Hasbro earned $1.35 billion, down 2% , during the third quarter, which ended Sept 30, while net profit fell 3.6% to $164.9 million.
Toys themed to Disney and Marvel’s “The Avengers,” as well as “Twister” and “Magic: The Gathering” were popular during the period among boys. But Hasbro took a hit with “Battleship,” based on the Universal adaptation, which drove down its entertainment and licensing revenue by 7% to $43.1 million. Film, produced for $210 million, earned nearly $303 million worldwide.
Profits for the entertainment and licensing segment fell to $10.7 million vs. $15.3 million a year earlier.
In the U.S., kids cabler the Hub continues to grow. The channel is now available in more than 70 million households, and ratings were up 62% in the third quarter year over year. Next year, the net will air new episodes of “Transformers Prime,” “Rescue Bots,” “Kaijudo,” “My Little Pony” and “Littlest Pet Shop.”
Company also will benefit from toy sales based on Marvel and Disney’s “Iron Man 3” and “Thor: The Dark World,” Paramount’s “Star Trek” sequel, Fox’s “The Wolverine” and Lucasfilm’s re-release of “Star Wars: Episode II” and “Episode III” in 3D. Hasbro also will produce toys around Marvel TV shows “Ultimate Spider-Man,” “Hulk and the Agents of Smash” and “Marvel’s Avengers Assemble” and new installments of “Star Wars: Clone Wars” next year.
Elsewhere at the company, declining interest in “Sesame Street” products sent preschool toy sales down 5% to $206 million.
Hasbro’s games biz is flat year over year, and the company said it hopes to boost sales through new partnerships with brands like Angry Birds and mobile gamemaker Zynga.