Hasbro Inc. (HAS.O)  said just two months ago that the first quarter wouldn’t be a good one, as it recovered from last year’s liquidation of Toys “R” Us Inc.

So investors were surprised when, instead of falling, sales rose 2 per cent -- the first gain in six quarters -- with revenue topping analysts’ estimate by 11 per cent. Meanwhile, the company delivered a profit of 21 cents a share, instead of the expected loss. The shares surged as much as 17 per cent, the most intraday since 2001.

Throughout 2018, Hasbro Chief Executive Officer Brian Goldner tried to soothe investors by saying that this year the company would return to “profitable growth.” But that was a hard sale as the loss of Toys “R” Us, which began liquidating about a year ago, persistently weighed on results, causing Hasbro stock to fall more than 10 per cent in 2018.

But now, Hasbro looks ahead of schedule. The company has done a good job boosting orders from non-traditional toy sellers among grocery and drug retailers, Goldner said Tuesday on a call with analysts. Revenue from its franchise brands, led by Transformers, Monopoly and Play-Doh, also returned to growth. The current quarter looks good, too, with sales during the lead-up to last weekend’s Easter holiday gaining.

“Progress is really starting to take hold in the second quarter,” Goldner said. “We’ve seen a number of markets perform above a year ago.”

Hasbro maintained its annual guidance for the year. The company noted that the first quarter is its smallest from a revenue standpoint. Sales totaled US$732.5 million in the period.

Overseas Performance

Investors also wanted to see how Hasbro performed overseas after poor results there last year. International sales rose 6 per cent after excluding foreign-exchange effects, although they dropped 2 per cent when translated into dollars.

The company maintained that its entertainment slate is healthy this year, driven by Magic: The Gathering Arena. Hasbro also has toy licenses for the Star Wars and Frozen franchises, which are releasing much-anticipated feature films in the fourth quarter. Toys for both films will debut at retailers on Oct. 4, the company said.

“Our expectation for the year continues to be a return to profitable growth,” Goldner said. “Certain brands are ahead of expectations.”