Hasbro Inc posted a quarterly profit that beat Wall Street expectations and gave an upbeat outlook for the full-year, fueling hopes for better toy sales during the holidays.
The world's No. 2 toymaker behind Mattel Inc said its full-year revenue will rise if sales trends continue to improve in line with the current quarter. The company also said it expects earnings to grow this year.
Hasbro shares rose 1 percent to $29.80 in premarket trade.
The positive outlook echoes comments made last week by Mattel about hope among retailers for a better holiday season after a dismal performance in 2008.
Sterne, Agee & Leach analyst Margaret Whitfield called Hasbro's outlook very encouraging and said investors were likely to reward Hasbro shares, especially since Mattel posted quarterly earnings last week that were only in line with analysts' estimates.
This is a very nice beat, even though the revenues seem to be skewed toward the boys' side, Whitfield said, referring to toys such as trucks and action figures.
Hasbro, known for its Transformers and Playskool brands, said third-quarter net profit rose to $150.4 million, or 99 cents a share, from $138.2 million, or 89 cents a share, a year earlier.
Net revenue was $1.28 billion, down from $1.30 billion a year earlier.
Analysts on average were expecting a profit of 93 cents a share, on revenue of $1.32 billion, according to Thomson Reuters I/B/E/S.
Revenue fell in the company's U.S. and Canada segment and international segment, but rose in the entertainment and licensing segment.
The company formed a joint venture earlier this year with Discovery Communications Inc to create a television network aimed at children.
Hasbro has an advantage over rival Mattel Inc this year, due to its lineup of toys tied to movies such as Transformers - Revenge of the Fallen and G.I. Joe - The Rise of the Cobra.
Hasbro is also expected to benefit from movie-related toys next year, when it will also have toys tied to the Iron Man 2 and Toy Story 3 movies.
Last week, Mattel, which makes Barbie and Elmo dolls, posted a smaller-than-expected drop in quarterly revenue, helped by gains in its Hot Wheels and American Girl brands.
Both Mattel and Hasbro still face price pressure as key retailers Wal-Mart Stores Inc and Target Corp have already begun offering steep discounts to woo shoppers ahead of the all-important holiday season.
Toys R Us is even offering an in-store lay-away plan that allows customers to reserve large toys, such as bicycles and play kitchens, early in the season and make a series of small payments over time.
(Reporting by Martinne Geller; Editing by Derek Caney)