Toy industry sales have been in a slight decline all year, stung by a video game industry slump, shoppers' curtailed spending and increased demand for electronic gadgets like smartphones and tablets.
Separately, the nation's second biggest toy maker announced on Monday that it is expanding its merchandising relationship with The Walt Disney Co. for properties including Marvel and Star Wars.
For the period ended June 30, Hasbro Inc. earned $36.5 million, or 28 cents per share. That compares with $43.4 million, or 33 cents per share, a year earlier.
Removing pension-related charges of 1 cent per share, earnings were 29 cents per share.
Analysts expected earnings of 34 cents per share.
Revenue for the Pawtucket, R.I., company fell 6 percent to $766.3 million from $811.5 million, missing Wall Street's $800.6 million estimate.
Sales were weak not only in the U.S. and Canada, where a 4 percent decline was reported, but overseas as well, which posted a 6 percent drop.
Sales of boys' toys declined 35 percent against tough year-ago comparisons that got a boost from merchandise tied to movies. While Nerf sales rose, sales of other brands, such as Marvel and Beyblade, weakened.
Sales of girls' toys jumped 43 percent in the current quarter, driven by sales of My Little Pony and Furby. Board game sales climbed 19 percent, with sales of Monopoly and Magic: The Gathering both climbing. Sales of other games, such as Twister and Jenga, also increased.
Sales for the preschool category rose 4 percent, benefiting from strong sales of Play-Doh, Playskool Heroes, Transformers Rescue Bots and Sesame Street products.
Last week rival Mattel Inc.'s second-quarter net income fell, hurt by ongoing softness in Barbie sales and a write-down on the Polly Pocket line.
Looking toward its future, Hasbro is taking steps to extend and expand its relationship with Disney. An amendment pertaining to the Marvel properties extends Hasbro's global rights for Marvel characters such as Iron Man and Spider-Man for two more years, through 2020. Hasbro's rights for the Star Wars franchise also run through 2020.
Hasbro will guarantee an additional $80 million in royalties to Disney in regards to Marvel-related products, contingent on additional Marvel movie releases. Hasbro will also pay up to $225 million guaranteed payments to Disney to include the next three Star Wars films and the release of other possible Star Wars-related entertainment, which was not accounted for under the prior agreement between the companies. Hasbro will pay $75 million at the agreement's signing, with the rest of the funds due when the next Star Wars movies are planned to be released. "Star Wars: Episode VII" is currently planned to be released in the summer of 2015.
Hasbro has implemented a cost-cutting program to maintain profitability, including a push to slash its workforce by 10 percent. The move also includes consolidating facilities and reducing the number of product extensions. While the toy maker incurred pension-related charges of $2.5 million in the second quarter, Hasbro said it may still see as much as $8 million in additional pension-related charges.
The company said that it still expects full-year charges of $30 million to $35 million, before pension-related charges. It also continues to anticipate gross savings of $45 million to $48 million for the year. This would amount to $13 million to $15 million in net savings for 2013, before pension-related charges.
Hasbro shares closed at $45.38 in trading That was near the upper end of their 52-week range of $33.34 to $48.97.