Funko hit a rebound in the third quarter thanks to aggressive cost-cutting measures and increased focus on digital sales.
Net sales dropped 14% in Q3 to $191.2 million versus $223.3 million during the same period last year. Funko, which experienced a massive 49% drop in the second quarter, notes that its Q3 decline is due in large part to slower store reopenings and other COVID-19 related impact in the U.S. specialty channel and throughout Europe.
Funko says it offset the COVID-19 impact thanks to growth in its own e-commerce business and through growth in domestic e-commerce and mass retail. Sales of figures, including Funko’s signature Pop! Vinyl line fell 18% though net sales of other products declined just 1% due to 25% growth in the company’s Loungefly brand.
“Our teams have executed well in 2020 despite the challenges presented by the pandemic,” says Funko CEO Brian Mariotti. “In the third quarter, we outperformed revenue expectations, reflecting strength within our domestic mass market and digital channels. We also maintained strong gross margins and cost controls, which allowed us to deliver improved profitability. The quarter was highlighted by our successful evergreen programs, expanded product offerings, and enhanced e-commerce capabilities, all of which are enabling us to drive increased engagement with our fans around the globe.”
Funko’s direct-to-consumer digital sales increased by more than 150% following the debut of a redesigned website and increased online engagement with families and collectors due to the cancellations of the live events such as Comic-Con International: San Diego (SDCC) and New York Comic Con (NYCC) that the company has become largely tethered to in recent years.
“While we expect to face continued headwinds in specific channels and regions in the fourth quarter, we believe we are well-positioned for the holiday season with our most diverse product offering yet and an expanded presence within key retail partners,” says Mariotti.
Funko net sales for the first nine months of the year fell 26.7% over the same period last year.