Hasbro Inc (NASDAQ:HAS), the toys and board game maker, is preparing to open 9.5% higher on Wednesday after it beat profit estimates and experienced a smaller-than-anticipated drop in sales.
Sales at the Monopoly and Nerf owner fell by around 24% to US$757.3 million during the first quarter, improving on Wall Street guidance of a 26.2% drop to US$738.6 million.
Improved revenues allowed the group to post adjusted earnings per share of US$0.61, a significant beat compared to analysts’ predictions of US$0.27.
Much of Hasbro’s success was attributed to lighter stock inventories and a rise in digital gaming revenues, helping offset a dampened demand for toys.
Inventories dropped by 53% year-on-year in the first quarter, while consumer product inventory dropped by 57%.
Hasbro has also implemented several cost-cutting measures, which combined with reduced inventories have allowed it to grow its operating margins from 1.8% to 15.3% in the space of a year.
Sales in the group’s digital division jumped 7% during the quarter, helped by the rise of games such as Baldur’s Gate III and Monopoly Go.
“We made solid progress in our turnaround efforts in the first quarter,” Hasbro’s CFO Gina Goetter said.