Following an 18% sales increase for Q3, the Santa Monica-based toymaker reported a 15% sales increase in Q4. Net sales for the fourth quarter were $152.5 million, up from $132.3 million during the same period in 2018. Gross margin was essentially flat at 30.4% versus 30.6% a year ago. For the year, Jakks says that sales rose to $598.6 million compared to $567.8 million in the prior year — a 5% increase amid a challenging climate for the toy industry and retail in general. Gross profit rose 2%.
“We are pleased to report solid improvement in our sales and adjusted EBITDA for the fourth quarter and for the full-year of 2019,” says Stephen Berman, Jakks’ chairman and CEO. “Despite significant industry-wide softness in retail toy sales through most of 2019, including the holiday season, we were able to grow our sales, as strong sales of Disney Frozen, Disguise, and Nintendo more than offset the declines of some older products.”
Beyond sales increases, Berman notes that the company reduced its normal operating expenses in a meaningful way, resulting in “a significant improvement in adjusted EBITDA for the year.”
Jakks’ portfolio of products from strong licenses — including Disney Princess, Frozen 2, Nintendo, Sega, and others — gave the company a boost that it says is already continuing into the new year.
“We expect good performance in 2020 driven by expansion within our evergreen categories and new product initiatives, coupled with new licenses as well as current licenses that we see growing in popularity, and additional owned IP launching throughout the year,” Berman says.
The Disguise costumes division also continues to power growth for the company. For the year, seasonal and Halloween products were up 10% and 18%, respectively. Jakks’ girls’ products rose 14%, offset in part by a 29% decline in boys’ products and a 16% dip in preschool.
As the industry heads into Toy Fair New York this weekend, Jakks Pacific has acknowledged that it is working to mitigate impact from the coronavirus on production and shipping of its products.