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Lego Posts Year-End Profit, Jakks Reports Q4 Loss image

Lego Posts Year-End Profit, Jakks Reports Q4 Loss

IL0305fancy1Jakks Pacific’s Fancy Nancy

Lego’s annual net profit increased 3.5% to $1.2 billion driven by strong sales of licensed products and sharp gains in revenue in China, while Jakks registered a narrower Q4 net loss amid the lingering effects of Toys R Us’ (TRU) liquidation.

Jakks’ net loss narrowed to $3.2 million in Q4 ended Dec. 30 from $30 million a year earlier amid strong sales of Incredibles 2, Harry Potter, Fancy Nancy and Daniel Tiger’s Neighborhood products.

Jakks’ Q4 revenue decreased 2.5% to $132.3 million as sales to TRU dropped to $1.3 million from $19.6 million year earlier and new distribution didn’t offset the lost revenue, CEO Stephen Berman said in releasing earnings.

“We expected that eventually most of the lost TRU sales would be picked up by other retailers,” Berman said. “But we do not expect our sales or industry sales to see anything of a full transfer of these sales” until 2020.

Despite not fully offsetting lost TRU sales this year, Jakks expects to post a 5% increase in annual revenue to $595 million due partly to sales of Frozen 2-related products, the revenue from which is expected to carry into 2020, Berman said. Jakks’ Frozen 2 toy sales are expected to match those of the original film, Berman said. The original film was a surprise hit when it was released in late 2014. Jakks has a broad line of Frozen 2 products and has several exclusives with retailers, Berman said.

“Everyone is counting on Frozen’s success from Disney to us and retailers,” Berman said.

Jakks’ increase in annual revenue also will be driven by Toy Story 4 and Godzilla-related products as well as well as continued strength with Daniel Tiger. Jakks’ will field an exclusive line of Godzilla toys at Walmart, Berman said.

Meanwhile, Lego’s annual revenue rose 4% to $5.4 billion as increased sales of Harry Potter, Star Wars and Jurassic World-related sets were mirrored by those non-licensed brands including Lego City and Lego Technic, company executives said in releasing earnings.

Sales in China increased by a double-digit percentage increase, while those in Europe and the North America rose in the single digits, CEO Niels Christiansen said. Lego benefited from strong initial sales of its augmented reality (AR)-related products that connected with a “Playground” AR app for smartphones. The line will be expanded this year with eight “Hidden Side” AR-based playsets.

Contacts:

Jakks Pacific, Stephen Berman, CEO, 424-268-9444

Lego, Marjorie Lao, CFO, +45 79 50 60 70

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