Faced with the challenges of doing business in the COVID-19 era, Jakks Pacific took a slight dip in sales during the first quarter.
The company’s net sales declined 6% during the first quarter of 2020 at $66.6 million compared to $70.8 million last year. Despite the dip in sales, gross margin grew to 24.6% compared to 20.2% in the same period last year, while net loss attributable to common stockholders was $12.3 million compared to $29.2 million in the first quarter of 2019.
“The first quarter has been a challenge for most companies, including Jakks, having to manage strains on the supply-chain early in the quarter and a volatile environment in March as consumer shopping patterns and retail logistics were upended by the effects of the COVID-19 pandemic,” says Jakks chairman and CEO Stephen Berman. “In spite of these unprecedented challenges, our net sales were down only 6%, and our supply chain has now almost completely returned to normal levels of activity. We have taken extensive steps to mitigate the impact of the disruption, including reducing operating expenses, conserving cash, and shifting our marketing efforts to product categories less likely to be adversely affected by the disruption.”
Berman says that the company had sales increases in licensed products tied to Disney‘s Frozen 2, SEGA’s Sonic the Hedgehog, and Nintendo. Growth in Jakks’ owned brands including Fly Wheels, Kitten Catfe, Maui Wave Hoop, and the Disguise Halloween costumes division was offset by declines in other categories.
“In times of economic uncertainty, toy sales have generally proven to be resilient, and we are fortunate to have so many evergreen product lines such as ball pits, play tents, and ride-ons,” Berman says.
Overall, Berman says that Jakks expects to emerge from the current retail disruption in the second half of the year as stay-at-home orders are eased or lifted.
