Jakks Pacific optimistic about fiscal 2020

Despite layoffs, pay cuts and a 6% decline in Q1 net sales, the toymaker expects to benefit from pent-up demand in the second half of the year.
May 14, 2020

Jakks Pacific reported its Q1 2020 net sales fell 6% to US$66.6 million. The decline was slightly offset by growth related to recent films Frozen 2 (pictured) and Sonic the Hedgehog.

In response to the ongoing COVID-19 pandemic, the California toymaker downsized in the first quarter by reducing its workforce through layoffs. Jakks also asked all employees, including the executive team, to take a temporary reduction in pay.

In a statement, Jakks CEO Stephen Berman said the first quarter was a challenge due to strains on the company’s supply chain, complications related to retail logistics and changing consumer shopping patterns.

In an effort to further mitigate the effects of the pandemic, the toymaker will reduce operating expenses, conserve cash and shift its marketing to focus on product categories less likely to be affected by the disruption, such as classic play patterns and evergreen brands. Jakks expects to benefit from pent-up demand and clean retail inventories in the second half of fiscal 2020.

Jakks Pacific’s optimism is similar to fellow toyco Mattel, which expects a “much-improved second half and holiday season.” Hasbro, however, has withdrawn its 2020 outlook due to uncertainty related to the pandemic and is bracing for a “challenging” second quarter.

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