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By Jennifer Yousfi
Hasbro Inc. (HAS), the world's second-largest toymaker, announced that company Chief Operating Officer , 44, will succeed current Chief Executive Officer when Verrechhia steps down in May.
The company also reported fourth-quarter results that exceeded analyst estimates.
At the time of the changeover, Verrechhia, who will turn 65 later this week, will be elevated to the post of chairman. Current Chairman, 58, a member of the toymaker's founding family, will step down, but will keep his seat on the company's board of directors.
Goldner, the CEO-elect, also was named to the board of directors.
"I am honored to succeed Al as CEO," Goldner said in a company statement. "This is a very exciting time for the company; we have a tremendous team at Hasbro [and each member shares] a common goal of continuing to grow our world class portfolio of brands through creativity and innovation."
Goldner is seen by many as one of the brightest young minds in the toy industry. He joined Hasbro in 2000 from Bandai America Inc., the North American arm of famous Japanese toymaker, Namco Bandai, where he also served as COO. He assumed COO duties at Hasbro in 2006 and has played an instrumental role in the company's turnaround.
Hasbro executives engineered that turnaround by having the firm focus on its core strength: A list of well-known brands, which includes Transformers, Nerf, Littlest Pet Shops, and Star Wars. Hasbro is also the owner of the rights to such classic board games as Monopoly, Operation, Scrabble and Sorry.
The announcement of the management change came on the same day the toymaker announced stronger-than-expected results for its fiscal fourth quarter.
For the three months that ended Dec. 30, net income was $133.7 million, a 24% increase from earnings of $108.3 million that were reported for the same quarter the year before.
Per-share earnings for the 2007 fourth quarter were 84 cents per share, a jump of 35% from earnings per share of 62 cents that were reported for the final quarter of 2006.
Revenue increased 16% to $1.3 billion, largely on the strength of movie-related toy sales and on sales overseas.
"Even in a movie year with strong boys' toys, their growth was broad-based," Chris White, an analyst at Los Angeles-based Wedbush Morgan Securities, told Bloomberg. "Hasbro products are selling better than Mattel in a variety of categories. It's hard to know how much is recalls versus better products."
Closing the Gap on Mattel
Larger rival, Mattel Inc. (MAT) has been beset by problems in the last year. Home to such flagship brands as Hot Wheels, Barbie and Fisher-Price, Mattel was hit hard by millions of toy recalls resulting from lead paint use in China-based factories.
Mattel earnings rose to $328.5 million in the just-completed fourth quarter from $286.4 million for the same quarter in the prior year. The bottom-line numbers beat expectations – but only because of a tax benefit. The company's operating earnings – which reflect the health of its ongoing business – actually declined due to higher costs, most of them due to the extensive recalls
"I think last year's recall news is behind us and the industry in general … I just have a real sense of optimism about 2008," Mattel CEO told Reuters in an interview. "We are always mindful of what is going on in economies, but if you look at history, the toy industry has always held up very well in tough economic times and I think this will remain the case."
Hasbro also is hopeful that sales will be strong in 2008, despite a consumer spending slowdown. Two new live action movies based on Hasbro toys – Transformers 2 and G.I. Joe – are currently in production and slated for release during the summer blockbuster season. But the toys will appear well in advance of the film premieres, stoking sales and earnings this year.
Both firms are concerned about rising commodity prices and expanding labor costs as inflation in China continues to ratchet upward. [For a report on the escalation of inflation in China, please click here. The report is free of charge].
Hasbro is planning to pass the rising costs along to consumers in the form of higher retail prices. However, Eckert says that while people may cut back in other areas, spending on toys won't suffer substantially.
"People still buy toys, no matter [what]. They may have tough times themselves, may cut back on spending on very large items such as vacations, for example, but children will always have a good Christmas," Eckert said.
News and Related Story Links:
- Hasbro Inc. Press Release:
Hasbro's Al Verrecchia to Become Chairman of the Board; Brian Goldner Named Next Chief Executive Officer
- Hasbro Inc. Press Release:
Hasbro Reports Record Net Earnings and Seventh Consecutive Year of E.P.S. Growth