American toy company, Jakks Pacific, has announced its Q2 results, reporting a decline of 11.5 per cent in net sales, compared to Q2 2017.
The company's net sales totalled US$105.8 million for the period, compared to US$119.6 million in 2017.
Gross margin for the second quarter was 26.4 per cent, down from 28.2 per cent due to increased levels of sales reserves.
Jakks Pacific chairman and CEO, Stephen Berman, said that the demise of Toys R Us (TRU) countered the positive results that some brands were seeing, but that this impact was expected by the company. Berman also cited the decline in sales of products that were tied with entertainment content as another reason for the Q2 results.
“As expected, during the second quarter we continued to see the impact of the liquidation of TRU, which offset the positive contribution of several successful products, including Incredibles 2, Squish-Dee-Lish, and MorfBoard.
“The net sales declines of 11.5 per cent in the quarter and 7.1 per cent year-to-date were primarily the result of the loss of sales to TRU and the short term disruption from its stores’ liquidation throughout the marketplace.
“We saw expected declines in several properties that were driven by unusually strong entertainment content a year ago, but we were pleased with the performance of new product segments. The investments in the C’est Moi and MorfBoard brands continue to show momentum as distribution broadens,” he said.
Net income (loss) for the second quarter was US$18.6 million compared to US$16.7 million in 2017.
Berman said that despite the decline in international sales, the business saw a 25 per cent increase in sales.
“Despite the fact that international sales were negatively impacted by the loss of TRU in many Europe and Asia Pacific markets, we saw a sales increase of over 25 per cent in the second quarter of this year compared to last year, due in part to our geographic expansion, new warehouses, and the launch of Incredibles 2 and Squish-Dee-Lish.
“As we look ahead to the second half, we will continue to focus on cost management and on new product launches.
“Our fall lines are moving forward as planned and we have a strong line-up of new product introductions that are a balanced mix of owned IP and licensed brands, including MorfBoard Xtensions, Real Workin’ Buddies Mr. Banks, Squish-Dee-Lish, Perfectly Cute, TP Blaster, Fancy Nancy, Incredibles 2, and Mega Man.”
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