Hasbro Inc's first-quarter profit fell almost 71 percent on higher costs and sluggish demand for games, puzzles and preschool toys in a seasonally weak period.
The second-largest U.S. toy company after Mattel Inc said on Thursday that it had spent more on product development and invested more in emerging markets and the team running its television projects.
Hasbro launched a children's television network called The Hub in a joint venture with Discovery Communications Inc late last year.
The maker of Nerf foam toys and Monopoly board games said it still expected both sales and earnings to rise in 2011.
The company has a huge entertainment lineup for this year, including toys based on movies such as Transformers: Dark of the Moon, Thor and Captain America: the First Avenger. It is also planning to take Hasbro Studios television programs beyond the United States this year.
The stage has been set for a strong year, Chief Executive Officer Brian Goldner said.
Mattel is due to report its results on Friday.
In the first quarter, Hasbro's net profit fell to $17.2 million, or 12 cents a share, from $58.9 million, or 40 cents a share, a year earlier.
Hasbro's sales were almost flat at $672 million, but beat the analysts' average estimate of $660.4 million, according to Thomson Reuters I/B/E/S. The revenue results included a $4.8 million foreign exchange benefit.
Globally, Hasbro's sales of boys' products rose 25 percent, but the company posted declines of 12 percent in games and puzzles, 13 percent in the girls' unit and 18 percent in preschool toys.
Many retailers focused on clearing excess inventory from the holidays in the first quarter rather than ordering new toys from manufacturers, analysts have said.
(Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn)