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Hasbro Sales Stronger Than Expected Despite Toys ‘R’ Us Implosion

Habro (HAS) has its game face back on.

The toymaker behind such brands as Monopoly, Transformers, and My Little Pony, gave Wall Street a pleasant surprise on Monday when it posted sales results that suggest it is learning to live without Toys ‘R’ Us more quickly than expected. That was reassuring news for shareholders as they start to think about the holiday season.

Hasbro shares rose as much as 10% in pre-hours trading after it said that sales for the fiscal quarter ended in late June fell 7% to $904.5 million from the year-earlier period, a result much better than Wall Street’s forecast for $833 million. That was also a much slower sales decline than the company reported in the first quarter. Profit was significantly down too, but at $60.3 million, or 48 cents a share, it breezed past analyst projections.

Hasbro CEO Brian Goldner had warned Wall Street earlier this year that it would take time to replace Toys ‘R’ Us, which recently closed its last U.S. store, with other retailers. Toys ‘R’ Us had been estimated to generate 15% of its sales.

But the results suggest Hasbro is making more solid progress in getting the likes of Walmart (WMT), Target (TGT), and (AMZN) to buy more products. And online retailers like Alibaba and Tmall are other retailers analysts say Hasbro can win more business from.

“We are focused on moving beyond the near-term disruption of losing a major customer, with a clear path forward including new retailer activations to meet the consumer demand made available by the Toys ‘R’ Us departure,” Goldner said in a press release.

Hasbro is ramping up its efforts to shift more of its business online, and brought in new executives more deeply knowledgable about e-commerce. And next year, the company should give some more help from products tied to Frozen 2, Star Wars: Episode IX and the expected rollout of “Magic: The Gathering Arena.”