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Jakks Tries To Grow Global Business; Q1 Off Slightly image

Jakks Tries To Grow Global Business; Q1 Off Slightly

Jakks Pacific is seeking to build its international business with licensing agreements, having recently signed a multi-year extension with Disney for China and landed fresh investment from China’s Hong Kong Meisheng Culture Co., Jakks executives told analysts.

More than 50 Disney properties are covered by a deal announced in March for costumes, action figures and other products, including Disney Princess and Frozen. And with Jakks’ $19.3 sale of 3.3 million shares Chinese toymaker Meisheng expected to close by early May, the company is moving to “broaden our geographic reach with new offices and new licenses,” CEO Stephen Berman said.

The investment, which gives Meisheng a seat on the Jakks board, deepens the companies’ existing joint ventures for distribution in China and development of animation through JP Studios based on Jakks IP, including the recently launched Cuppatinis toys, Berman said.

In expanding its international business, Jakks has opened offices in Germany, Mexico, China and most recently, France, each staffed with 3-4 people, in most cases replacing a distributor. The new offices “significantly increase” Jakks’ ability to secure new licenses, Berman said.

Meanwhile, Jakks’ net loss for Q1 ended March 31 widened to $18.2 million from $17.3 million as sales declined 1.3% to $94.5 million as Jakks sold through inventory built up during the sluggish holiday season. Inventory was $67.4 million, down from $75.4 million on Dec. 31, but up from $53.5 million a year earlier. Jakks’ lower sales of Disney Tsum Tsum and Frozen products was offset by gains in Disney Princess, including Moana and Beauty and the Beast. Jakks’ sales of girls’ products rose 8% to $46.4 million, while the boys segment posted a 9% decline to $15.9 million despite strong sales of Nintendo-licensed products tied to the launch of the company’s new Switch console. Jakks has global rights to Nintendo characters outside Japan.

Sales of seasonal products fell 10% to $27.5 million on a decline in licensed furniture, while the preschool business reported a 29% decrease to $1 million despite strong sales of Daniel Tiger’s Neighborhood-related products.

Contact:

Jakks Pacific: Joel Bennett, Chief Financial Officer,310-456-7799, Bennettj@jakks.com

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