PROVIDENCE, R.I. - Hasbro Inc.'s Chief Executive Alfred J. Verrecchia will step down in May and be replaced by Brian Goldner, who as chief operating officer has played a key role in the toymaker's turnaround in the past several years.
The announcement by the world's second biggest toy company came as it reported a hefty 24 percent rise in fourth-quarter profit and said sales rose 16 percent, driven by its core brands including Transformers, Littlest Pet Shop and Star Wars.
Verrecchia, who turns 65 this week, will become chairman of the board at the Pawtucket-based company when Goldner, 44, starts his new job May 22.
"The company — while it's had a great run the last couple of years — it's just at the beginning of what it can achieve going forward," Verrecchia said in a phone interview. He called Goldner "a young, talented, savvy entrepreneurial spirit that's going to take the company to the next level."
Verrecchia has spent 43 years at Hasbro and took over as president and chief executive in 2003, succeeding Alan Hassenfeld, a member of Hasbro's founding family. Hassenfeld, the current board chairman, will step down as chair but remain a board member, the company said.
Goldner joined Hasbro in 2000 from Bandai America Inc., becoming COO in 2006, and has helped Verrecchia orchestrate a comeback for the once-troubled company.
After Hasbro lost $144 million in 2000 and was forced to cut hundreds of jobs, Goldner helped lead the company's rededication to its "core brand strategy," focusing its efforts on time-tested brands consumers know and trust, such as Monopoly and Transformers.
The strategy has paid off, with Hasbro reporting Monday that its 2007 revenue rose to $3.84 billion, up from $3.15 billion a year earlier.
"We all started together back in a different time and place when the company was not as successful as it is today," Goldner said in a phone interview. "We really do fundamentally believe we're in the very early innings of the potentiality for this company."
Gerrick Johnson, an analyst with BMO Capital Markets, said Goldner is good at what he does and respected within the industry.
"He's a very strong toy executive and one of the brighter young toy executives out there," Johnson said. "He's been doing all the heavy lifting the last couple of years."
Its shares rose 54 cents, or 2.1 percent, to $26.41 Monday.
The company, which also makes Nerf and Playskool brands and board games like Sorry and Operation, said it plans price increases this year to offset costs that have risen 14 percent to 15 percent. Verrecchia said the company plans to hold its margins steady with those of 2007, and added he expected a strong 2008.
Hasbro said its profit rose to $133.7 million, or 84 cents per share, in the three months ended Dec. 30 from $108.3 million, or 62 cents a share, a year earlier.
Wall Street expected the company to report earnings of 81 cents per share for the latest quarter. The estimates typically exclude one-time items.
Sales climbed to $1.3 billion from $1.1 billion a year earlier.
Larger rival Mattel Inc. recently posted a 15 percent rise in fourth-quarter profit, but faced negative publicity because of its recalls of millions of Chinese-made toys tainted with lead. Hasbro avoided the lead-paint related recalls, but it did recall about 1 million Easy-Bake ovens after reports of about 250 children getting their hands caught in the oven's opening.
This year, Hasbro expects Transformers to continue doing well due to an animated series that started in January. Star Wars and Spider-Man are also expected to release animated shows later this year.
Two Hasbro-related live-action movies are scheduled to be released in 2009 — Transformers 2 and G.I. Joe, based on the Hasbro action figure, which starts shooting Monday, Verrecchia said. Despite a Hollywood writers strike, there were no delays in the movies' production schedules, he said.
Hasbro's international revenues grew 29 percent to $489.2 million for the quarter, partly on better foreign exchange rates.
For the full year, Hasbro earned $330 million, or $1.97 a share, up from $230.1 million, or $1.29 a share, a year ago. Excluding taxes and the company's repurchase of outstanding warrants held by Lucasfilm Ltd. and Lucas Licensing Ltd., per share earnings were $2.03, the company said.
The company this year repurchased 20.8 million shares of common stock at $587 million.
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