The No. 2 U.S. toymaker, much like larger rival Mattel Inc
Retailers also cut back on shipments as they tried to reduce their inventories, at a time when Hasbro said its own inventories were too high.
But Hasbro said things may be getting better and that nothing had changed to alter its expectations that sales and earnings will rise this year.
Box-office trends and the initial sales of products in the second quarter will be key elements in the near term for Hasbro shares, Wachovia analyst Tim Conder said in a note to investors.
We would use any weakness as an opportunity to build positions, he said.
Hasbro expects the release of the movies Transformers: Revenge of the Fallen, G.I. Joe: Rise of the Cobra and X-Men Origins: Wolverine to drive business in coming quarters.
I think Hasbro has a lot of momentum going into the next couple of quarters, Wedbush Morgan analyst Chris White said, noting the movie release schedule.
Mattel on Friday posted better gross margins, overshadowing a wider-than-expected first-quarter loss and lifting Mattel and Hasbro shares by 15.2 percent and 6.6 percent, respectively.
Hasbro share were down 2.5 percent at $27.21 in morning trade on Monday, while Mattel was down nearly 1 percent at $14.87.
Hasbro's net profit was $19.7 million, or 14 cents per share, in the first quarter ended March 29, down from $37.5 million, or 25 cents per share, a year earlier. The results matched analysts' average forecast, according to Reuters Estimates.
Hasbro said shipments rose in March after falling in January and February.
The company had $295.2 million in inventory on its balance sheet at the end of the first quarter, up from $291.2 million a year earlier but a smaller increase than in recent quarters.
We're pretty happy with the quality and the quantity of our inventory at the moment, David Hargreaves, Hasbro's chief operating and financial officer, said on a conference call.
Sales fell 11.7 percent to $621.3 million. Excluding the impact of the stronger dollar, which reduces the value of international sales, sales fell 6 percent.
Aside from the stronger dollar, Hasbro blamed the lower sales on retailers' cutting inventories and this year's later Easter holiday, which pushed holiday-related sales into the second quarter.
Hasbro recently extended its royalty deal with media company Marvel Entertainment Inc
(Reporting by Martinne Geller, Aarthi Sivaraman and Brad Dorfman; Editing by Derek Caney and John Wallace)