Jakks Pacific reports Q1 losses

The US toymaker’s sales fell by US$1.3 million in Q1 2017, though declines were offset by a strong demand for products related to Disney properties.
April 25, 2017

Following a year shaped by new category investments, US toymaker Jakks Pacific saw its sales fall by US$1.3 million to US$94.5 million in Q1 2017.

In 2016, Jakks acquired C’est Moi, a producer of skin care and makeup products aimed at kids involved in the performing arts. Incremental overhead and startup costs associated with the line led to a decline in operating income, which was also affected by the 2016 launch of Studio JP, an animation initiative to produce content based on the toymaker’s proprietary IPs.

For the Q1 period ended March 31, Jakks reported a working capital of US$196.5 million, compared to US$226.9 million in 2016. The company’s net loss was US$18.3 million, up from US$17.4 million a year ago. Adjusted earnings for Q1 were negative US$10.6 million.

Gross margin was also down to 31.8% from 32.5% last year. Contributing to the decline was the pricing pressure on the company’s Funnoodle pool toys line, as well as higher tooling amortization on increased capital expenditures in 2016.

Declines were offset by products inspired by Disney properties. Q1 sales benefited from the House of Mouse’s recent live-action remake of Beauty and the Beast and the DVD launch of Moana. Additionally, sales of Jakks’ Disney Tsum Tsum collectible figure line continue to grow in international markets.

CEO Stephen Berman said the Q1 sales performance was in line with expectations and consistent with the seasonality of the industry.

Looking ahead to the rest of 2017, Jakks expects improved profitability from evergreen brands and its expansion into new categories. A number of new products will be introduced later this year from both owned IPs and licensed brands, including Marvel’s Guardians of the Galaxy 2, Disney/Pixar’s Cars 3, DC Superhero Girls, Real Workin’ Buddies, Mr. Dusty and Nintendo Splatoon.

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