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<< Previous   of   Next >> Associated Press  (click to enlarge) An actor portraying Mr. Monopoly for Hasbro poses for a photo at the American International Toy Fair in New York. Hasbro on Monday said its earnings rose 14 percent in the first quarter.   ADVERTISEMENT   Related Stories • All the news that's green 4/22/08   CONTACT THE HERALD Mike Benbow, Business Editor benbow@heraldnet.com   Published: Tuesday, April 22, 2008 Mattel posts loss; rival Hasbro posts profit Associated Press PROVIDENCE, R.I. -- Barbie maker Mattel Inc., struggling with higher costs and a big drop in sales of its Fisher-Price toys following last year's lead-related recalls, disappointed Wall Street on Monday with a $46.6 million loss in the first quarter. Its chief rival, Hasbro Inc., had a surprise of its own, reporting a 14 percent profit increase that beat analysts' expectations on strong growth in its Transformers and Playskool brands. Shares of Mattel, the world's biggest toymaker, fell $1.78, or 8.2 percent, to close at $20, while shares of No. 2-ranked Hasbro rose $3.10, or 9.8 percent, to close at $34.65 after peaking at a 52-week high of $35.07. Mattel, based in El Segundo, Calif., lost 13 cents per share in the three months ended March 31 compared with last year's quarterly profit of $12 million, or 3 cents per share. Its sales fell 2 percent to $919.3 million from $940.3 million in the year-ago period, despite the benefits of a weak dollar that helped boost sales overseas. Analysts surveyed by Thomson Financial had expected profit of a penny per share on sales of $926.6 million. Chief executive Robert Eckert said commodities such as resin and oil, as well as labor cut into profit margins. "Labor costs are increasing dramatically in China," Eckert said. He said profits were expected to improve in the latter half of the year after a price increase in June. Mattel's suit against a former employee and MGA Entertainment Inc. over the Bratz doll line also drove up legal costs, which were expected to trend higher at least through the second quarter. Mattel says a former doll designer illegally sold designs for the doll to the privately held company. Lehman Brothers analyst Felicia Hendrix said there were some bright spots, including a 10 percent increase in sales of American Girl products thanks to store openings in Atlanta and Dallas. "While we believe these positives are notable in this overall disappointing quarter, we remain neutral on Mattel," she wrote in a research note. Mattel's Fisher-Price brand, which was plagued by recalls for lead last year, was the company's weakest category, with a decline in worldwide sales of 13 percent. By contrast, Hasbro's Playskool brand was up 17 percent for the quarter, the company said. Hasbro, based in Pawtucket, had no recalls for lead last year. It did recall about 1 million Easy-Bake ovens after reports of about 250 children getting their hands caught in the oven's opening. Hasbro said growth in brands such as Transformers and Littlest Pet Shop helped it beat expectations, driving earnings up to $37.5 million, or 25 cents per share, for the three months ended March 30. That was up from $32.9 million, or 19 cents per share, during the same quarter a year ago. Analysts polled by Thomson Financial had forecast net income of 14 cents per share.

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