American toy business, Jakks Pacific, has released its first quarter financial results to 31 March, revealing that net sales were down in Q1, from US$93 million in 2018, to US$70.8 million in 2019.
Jakks cites the Toys R Us liquidation in March 2018, the success of Incredibles 2 in 2018, as well as the late Easter in 2019 as reasons for the negative sales results.
Gross margin for Jakks in Q1 was 20.2 per cent compared to 24.7 per cent in the comparable period in 2018, while net loss attributable to Jakks was US$29.2 million compared to US$36.2 million in 2018.
CEO of Jakks Pacific, Stephen Berman, said that the timing of film releases in 2019 has also contributed to the slowing sales in Q1.
"As expected, our results for the first quarter showed the impact of the loss of Toys R Us as a significant customer, and the impact of a later Easter holiday.
"In addition, the timing of certain key new product launches tied to major theatrical film releases has, as expected, significantly shifted our revenue to the second half of the year.
"Several licensed properties that drove our sales in the first half of last year saw declines, notably The Incredibles 2, Moana, and Tsum Tsum, in addition to declines in Squish Dee Lish, our own property.
"Still, we are pleased with the success we have seen so far with such licenses as Godzilla, Harry Potter, Fancy Nancy and Aladdin, and our evergreen lines in Moose Mountain and Kids Only."
Despite the Q1 results, Jakks is still anticipating a strong sales period in the second half of 2019, across both licensed and non-licensed properties.
"We are looking forward to stronger sales in the second half of the year, which should benefit from a strong slate of entertainment content, notably Frozen 2, as well as Toy Story 4, the 30th Anniversary of the release of Disney’s The Little Mermaid, and Disney’s Gigantosaurus animated TV series," Berman said.
"In addition, we expect strong contributions from products based on some of our own IP, including TP Blaster: Sheet Storm, Slap Ninja, Pinata Fiesta and Power Dozer.
"Consistent with our strategy, we continue to see our sales through online channels increase as a per cent of total sales, which we expect will help us in a shifting retail landscape," he said.
While the Q1 results may be negative, Jakks said that its goal for 2019 is to grow sales by approximately five per cent on a year-over-year basis with improved levels of Adjusted EBITDA compared to 2018.
To read the full Q1 report, click here.