Hasbro Inc (HAS), the No. 2 U.S. toy maker, on Monday reported fourth-quarter earnings rose 7.2 percent, after cutting costs to offset a tougher retail environment and declines at its U.S. toys unit.

Hasbro, which makes My Little Pony (search) and Mr. Potato Head (search) toys, said net earnings rose to $82.1 million, or 44 cents per share, in the quarter ended Dec. 26, from $76.6 million, or 41 cents per share, a year earlier.

Analysts, on average, had expected profit of 49 cents per share, according to Reuters Estimates.

Revenue fell to $1.06 billion from $1.12 billion a year ago.

"Our top-line results reflect a tougher retail environment in the fourth quarter than we expected, as well as a disappointing performance in the U.S. toys segment, primarily related to softness in our boys business," Chief Executive Alfred Verrecchia said in a statement.

Hasbro, based in Pawtucket, R.I., had a strong 2003 with popular items like its lifelike plush animals Furreal Friends, spinning tops Beyblades (search), and VideoNow (search) handheld video player. The company has also capitalized on classic brands like My Little Pony, Transformers and Trivial Pursuit.

Revenue in the U.S. Toys segment, which includes products like the Easy-Bake (search) oven, Tonka trucks and Play-Doh, fell to $263.7 million from $318.9 million a year ago, hurt by softness in the boys business, including lower revenue from the high-margin Beyblades.

International revenue rose to $504.9 million from $477.2 million a year ago, with the weak dollar contributing $31.8 million.