Jakks Pacific hit some bumps in its second quarter, reporting earnings that reflect declines over last year.

Net sales for the second quarter were $95.2 million compared to $105.8 million during the same period last year, while gross margin declined to 18.6% versus 26.4% a year ago. Overall loss attributable to Jakks Pacific grew to $22.5 million compared to $18.6 million during the second quarter of last year. Despite the results, Jakks is looking forward to a solid back half of the year, fueled by new licensed products, and substantial increases in its Disguise costumes division.

“As expected, our results for the second quarter showed the effect of declines in products that contributed strongly to results in the second quarter of last year,” says Stephen Berman, CEO of Jakks Pacific. “We saw strong growth in our Disguise, Halloween costume business, and strong contributions from toys tied to several new theatrical releases, including Aladdin, Godzilla, and Toy Story 4, but these were more than offset by the declines in toys tied to Incredibles 2 and our Squish Dee Lish products. As we have noted before, our sales this year have been shifted to the second half as a result of the timing of several films and television shows, notably Frozen 2, as well as Toy Story 4, the 30th Anniversary of the release of Disney’s The Little Mermaid, and Disney Jr.’s Gigantosaurus animated TV series,” he adds.

Disguise continues to grow as live events and cosplay gain ground. The company maintained a presence at Comic-Con International: San Diego (SDCC), which included a Pokémon relay race at a Con kickoff party thrown by our sister publication, the Pop Insider. Earlier this year, Disguise entered into a multi-year deal with The Pokémon Co. International to produce a variety of branded costumes and accessories. Additionally, the changing shape of the retail landscape should also allow Jakks and other companies a chance to refocus.

“We remain confident that our second half sales will show renewed strength, as the disruptions caused by Toys “R” Us’ liquidation in the U.S. no longer weigh down the industry,” Berman says. This coupled with the recently announced recapitalization transaction to strengthen our balance sheet provides a clearer pathway to the future here at Jakks.”