Funko Hits a Snag in Preliminary Q4 Earnings Report

If there was any doubt about the challenging environment faced by toymakers and retailers during the last holiday season, Funko just put a spotlight on it.

Following several quarters of phenomenal growth, the Washington-based company reported preliminary Q4 financial results that fell below expectations, and unusually reflected an 8% sales decline. Funko says that sales for the quarter ending Dec. 31, 2019 were approximately $214 million, down from $233 million during the same period in 2018. The company says that soft sales of products related to “certain tentpole movie releases” and reduced orders from some of its top customers through the holiday season more than offset strong growth in Europe and for the Loungefly brand.

“While we are disappointed in our fourth-quarter results, we are confident that our strong track record of innovation through new product categories and properties, as well as continued international expansion, will continue to propel the company in 2020 and beyond,” says Funko CEO Brian Mariotti. “The underlying strength of our Pop! and Loungefly brands, combined with Funko’s unique ability to leverage evergreen properties will enable the company to achieve high-single-digit to low-double-digit sales growth in 2020. Since 2017, we have grown sales at a compound annual rate of more than 20%. The key drivers that have fueled our growth and brought Funko to where it is today remain intact. Looking forward, we plan to continue investing in existing and new products, people, and global operations to ensure the company is positioned for long-term success.”

When Funko reports its official Q4 and full-year financials after the markets close on Thursday, March 5, it expects to show double-digit growth for Loungefly in the fourth quarter, with a 10% decrease in sales of collectible figures for the same period.

One interesting note is that Funko is taking a one-time, $16.8 million charge to write-down the disposal of “slower-moving inventory to increase operational capacity.”

The initial outlook for this year shows growth that the company says will be fueled in part by direct-to-consumer engagement and the creation of new IP across toys and games.

Funko will showcase its full range of new products at Toy Fair New York, taking place from Feb. 22-25 at the Jacob K. Javits Convention Center.

Click here to view the Toy Book’s full coverage of Toy Fair New York.

About the author

James Zahn

James Zahn

James Zahn, AKA The Rock Father, is Editor-in-Chief of The Toy Book, a Senior Editor at The Toy Insider and The Pop Insider, and Editor of The Toy Report, The Toy Book‘s weekly industry newsletter. As a pop culture and toy industry expert, Zahn has appeared as a panelist and guest at events including Comic-Con International: San Diego (SDCC) Wizard World Chicago, and the ASTRA Marketplace & Academy. Zahn has more than 30 years of experience in the entertainment, retail, and publishing industries, and is frequently called upon to offer expert commentary for publications such as Forbes, Marketwatch, the Wall Street Journal, the New York Times, USA Today, Reuters, the Washington Post, and more. James has appeared on History Channel’s Modern Marvels, was interviewed by Larry King and Anderson Cooper, and has been seen on Yahoo! Finance, CNN, CNBC, FOX Business, NBC, ABC, CBS, WGN, The CW, and more. Zahn joined the Adventure Media & Events family in 2016, initially serving as a member of the Parent Advisory Board after penning articles for the Netflix Stream Team, Fandango Family, PBS KIDS, Sprout Parents (now Universal Kids), PopSugar, and Chicago Parent. He eventually joined the company full time as a Senior Editor and moved up the ranks to Deputy Editor and Editor-in-Chief.