Licensed properties that drove growth for Jakks Pacific in fiscal 2018 are continuing to contribute to declines for the toyco in 2019 after a 23% sales drop in Q1. Weakness in products related to Incredibles 2 led to a 10% drop in net sales for the California-based toymaker in Q2 2019, to the tune of US$95.2 million.
Net loss for the quarter increased 20% to US$22.5 million while gross profit declined 36% to US$17.7 million.
Products tied to new theatrical releases like Aladdin, Godzilla and Toys Story 4 showed some strength during the second quarter, however, and Jakks reported it anticipates the majority of its sales will shift to the second half of the year due to the timing of films like Frozen 2 (November 22).
Similarly, licensed properties, including Incredibles 2, Moana and Tsum Tsum contributed to a 23.8% sales decline to US$70.8 million in Q1 2019. The toymaker’s net sales fell 7% to US%567.8 million in fiscal 2018, though brands like Incredibles 2 and Harry Potter performed well during the fourth quarter.
Previously, Jakks Pacific was in negotiations with Hong Kong Meisheng Cultural Company, which expressed interest in January 2018 in buying additional Jakks shares to control 51% of the company’s total shares. Following delays in approvals for the Meisheng transaction, the toymaker entered into multiple agreements with Wells Fargo Bank, Oasis Investments II Master Fund and an ad hoc group of holders to recapitalize Jakks’ balance sheet (including three-year extensions of the toyco’s outstanding debt obligations). Looking forward, Jakks expects its sales will grow 5% in fiscal 2019.