By Matt Andrejczak

SAN FRANCISCO (Dow Jones) -- Hasbro Inc. reported Monday a 30% decline in quarterly net income, as the holiday sales season proved to be a disappointment and the dollar gained strength.

The world's No. 2 toy maker said it earned $93.6 million, or 62 cents a share, in the fourth quarter. In the year-earlier period, Hasbro made $133.7 million, or 84 cents a share.

Sales fell 5% to $1.23 billion from $1.3 billion. Hasbro said sales started to slow in October as weak consumer spending exacerbated. To spur demand and help toy retailers avoid excess shelf inventories, Hasbro worked with toy retailers to mark down toys priced above $200 and slower-moving items, such as toys tied to movies Indiana Jones and the Hulk.

Excluding the impact of the rising dollar against other global currencies, Hasbro said sales would have risen 1%. Sales of Nerf, Star Wars, Playskool, Littlest Pet Shop and Easy Bake were among the strongest in the fourth quarter.

On Wall Street after the report, Hasbro shares rose 6% to $25.01 in early trading.

Chief Executive Brian Goldner said in a conference call the toy maker's business will improve after March, when it begins to ship toys for movies Transformers 2 and Wolverine and further expands its digital-gaming partnership with Electronic Arts.

"As the year progresses, we would expect to see more momentum around our major movie initiatives and as we roll out our many new brand initiatives this fall" Goldner said.

Last week, toy rival Mattel rattled investors with news that its profit fell 46% on weaker sales.

Even though toy companies have prevailed in past recessions, the Mattel report seemed to show that the industry had a much tougher time withstanding a massive slowdown in global consumer spending the past several months. Toy factories in China have been shutting down and mall-based retailer KB Toys is liquidating.

Mattel has said it will eliminate some product lines and cut overhead costs.

On Tuesday, market-researcher NPD is expected to release a final data on 2008 toy industry sales. U.S. sales are expected to decline from the $22 billion made in 2007.

On Feb. 17, Hasbro plans to pay a quarterly 20 cent dividend to shareholders of record Feb. 3.

The stock is down 3% over the past 12 months.