Jakks Pacific Q2 Results Off On Licensed Downturn
Jakks Pacific’s sales in Q2 ended June 30 tumbled 15.1% to $119.6 million, as sales of products tied to Frozen, Teenage Mutant Ninja Turtles, Star Wars and World of Warcraft dropped significantly, company executives told analysts.
The downturn in revenue was partly offset by strong sales of products tied to Nintendo and Disney Princess licenses, the latter including Moana, Elena of Avalor and Beauty and the Beast.
The company said its revenue also was hit by its decision last year to suspend shipments to Sears Holdings.
Meanwhile, Jakks’ Q2 net loss widened to $16.6 million from $4.1 million a year earlier as it took a $2.3 million bad debt charge for 2013-2014 sales to an unidentified online retailer. Q2 gross margin sank to 28.2% from 31.8% a year ago due partly to increases in some royalty rates. The Disguise costume business, accounted for a larger percentage of revenue at lower than Jakks’ average margins, company officials said.
The company reported a 16.7% revenue decline in girls business to $51.3 million. In the boys segment, which has large Star Wars figures and World of Warcraft products, revenue fell 32% to $15.2 million. Its Disguise business for Halloween was up 2% to $31.9 million, and is expected to be boosted in the second half by new licenses for Shopkins, PJ Masks and Minecraft, company executives said.
In the second half, Jakks also plans to ship the first C’est Moi youth skincare and cosmetics items since acquiring the company last year. The products will be non-licensed and entertainment IP licensing isn’t being planned for the brand, a company spokeswoman said.
Jakks also is developing its own IP with an eye toward licensing. It started shipping Cuppatinis collectibles – dolls that transform into teacups – earlier this year and developed animated content as part of its Studio JP joint venture with Chinese toymaker Meisheng Culture Co. Jakks closed in Q2 on the sale of 3.7 million shares to Meisheng, which is now the company’s largest shareholder. Studio JP also is developed animated content for Jakks’ Power Rippers vehicles that are due in the fall.
