American toy business, Jakks Pacific, has released its third quarter earnings, reporting that its net sales declined 10 per cent.
The net sales for the period were US$236.7 million compared to US$262.4 million in Q3 2017.
Jakks Pacific chairman and CEO, Stephen Berman, said that although the business felt the negative impacts from Toys R Us, several brands still performed well in the period.
“As was the case in the first half, during the third quarter we continued to see the impact of the US liquidation of Toys R Us, which offset the positive contribution of several successful product lines, including Incredibles 2, Fancy Nancy, Perfectly Cute, Squish-Dee-Lish and MorfBoard.
“The net sales declines of 10 per cent in the quarter and nine per cent year-to-date were primarily the result of the loss of sales to Toys R Us and the disruption from its stores’ liquidation throughout the marketplace.
“We saw expected declines in several entertainment-driven properties, but we were pleased with the performance of our new product segments. The investments in the C’est Moi and MorfBoard brands continue to show momentum as distribution broadens,” he said.
Berman also indicated that the shift in the retail landscape, means that Jakks Pacific will reduce its operating costs, including letting go of staff.
“Like other companies in our industry, we have seen shifts in the retail landscape that require us to adapt our cost structure and overhead, and we are taking steps to reduce our operating costs and improve our profit potential.
“Earlier this month, we initiated a plan to reduce our global workforce and consolidate certain of our operations and functions to reduce overhead, most of which we expect to be realised in calendar year 2019.
“As we look ahead to the holiday season, we continue to focus on new product launches and keeping retail inventories lean. We expect the toy industry in 2019 to benefit from the continued shift in sales to healthier retailers and a robust license environment,” he said.
Jakks also reported that Hong Kong company, Meisheng Cultural Company Limited reiterated its interest in purchasing newly issued shared of Jakks' common stock, so that it would own 51 per cent of the business' outstanding shares.
Jakks is working with Meisheng to consider the offer.
To read the full Jakks Pacific Q3 report, click here.