The rebound is on for Washington-based Funko.
Following some big declines driven by the COVID-19 pandemic and the cancellation of live events last year, the “purveyors of pop culture” struck back hard in Q4 with net sales increasing 6% to $226.5 million as gross margin hit 37.2% alongside gains in net income and cash flow. Most impressively, Funko’s U.S. net sales spiked 18% to $171 million, the largest domestic quarter in the company’s history.
“We are pleased to finish the year with strong fourth quarter results, including 6% sales growth, which reflects better than expected performance across our brands, products, channels and geographies,” says Funko CEO Brian Mariotti. “Against a challenging environment in 2020, our teams were resilient, quickly adapted to the dynamic environment and remained focused on executing our strategic growth priorities. During the year, we successfully strengthened our direct-to-consumer platform, launched new games and toys that extended our reach, expanded our presence among key retail partners in mass and digital, and drove robust fan engagement through global virtual events.”
A year ago, the future was uncertain for Funko as the company exited a successful showing at Toy Fair New York (TFNY) only to get hit with event cancellations and physical retail closures beginning in March. Following an 18% sales decline in Q1 and a whopping 49% hit in Q2, the signs of a turnaround started to emerge in Q3 as the company cut losses to just 14% amid 150% growth in digital sales thanks to a relaunched website and a diversified product mix.
In Q4, customer demand kicked in and carried through the holiday season as sales of Funko’s non-figure products grew 30% versus 2019, primarily driven by a 51% spike in sales for Loungefly items and strong consumer interest in Funko Games, plush, and accessories. Funko’s ubiquitous Pop! vinyl brand grew 1% globally with a 12% spike in the U.S. The company says that 68% of its total sales were attributable to evergreen content.
“We believe the company is strongly positioned to deliver solid top line growth and improved profitability in 2021,” Mariotti says. “We are remaining focused on our strategies to maximize Funko’s core pop culture platform, drive further category diversification, expand internationally and accelerate our direct-to-consumer business. For the full year, we expect to achieve revenue growth of 25% to 30% versus 2020, which also reflects growth from pre-pandemic levels in 2019.”
For the year, most of Funko’s remaining declines are due to the continued impact of COVID-19-related closures in Europe and other international markets. Total sales in the U.S. declined 7% for the year, with COVID-19 impact offset by growth in the mass-market, third-party e-commerce, and Funko’s own direct-to-consumer retail business.
By the end of 2020, Funko’s reimagined web store offered more than 2,000 products, compared with just 200 during TFNY.