Jakks Pacific Inc. today reported financial results for the first quarter ended March 31, 2017. Highlights include net sales of $94.5 million; gross margin in line with expectations at 31.8 percent; inventory levels down from year-end as anticipated to $67.5 million; and adjusted EBITDA down modestly year over year to negative $10.6 million.
Net sales for the first quarter were $94.5 million compared to $95.8 million reported in the comparable period in 2016. The net loss attributable to Jakks Pacific for the first quarter was $18.3 million, or $1.01 per diluted share, which compares to a net loss attributable to Jakks Pacific of $17.4 million, or $1.01 per diluted share, reported in the comparable period in 2016. Adjusted EBITDA for the first quarter was negative $10.6 million, compared to Adjusted EBITDA of negative $9.2 million in 2016.
Gross margin in the first quarter was 31.8 percent, down slightly from 32.5 percent last year as a result of pricing pressure on Funnoodle pool toys and higher tooling amortization on increased capital expenditures in 2016 offset in part by lower royalties resulting from a shift in product mix.
Operating income declined in part due to incremental overhead and startup costs associated with our C’est Moi makeup and skincare product line acquired in 2016 and Studio JP, the company animation initiative, as well as increased testing costs related to the expansion of sales of certain products in International markets, offset in part by lower media buys.