You could say that the Action Play & Collectibles business at JAKKS Pacific is doing super this year.
Fueled by the power of The Super Mario Bros. Movie and other top licenses, JAKKS saw a 41% spike in sales for the category in the second quarter as the company reported its second-highest first half sales in 15 years.
JAKKS, like the rest of the U.S. toy industry, has faced a challenging year due to inventory issues and other factors at retail. In Q2, JAKKS’ net sales slipped 24.3% to $166.9 million versus last year’s company record $220.4 million.
I’m pleased to say that the first half of the year has met, and in many cases, exceeded our expectations. Consumers reacted favorably to our new product launches, both supporting the most talked about film releases of the first half of the year as well as the innovation and excitement we’ve brought to our classic, evergreen product lines. Retail sell-through accelerated in the quarter from earlier in the year, as customers continued to work down inventory levels and refocus their attention and planning for the annual holiday shopping season."
As previously reported, the company paid off some high-cost debt earlier this year to better position itself for the future.
Berman says that the company has its lowest Q2 inventory balance since 2021 and that it’s monitoring uncertainty around consumer behavior.
Following the record $72 million in products shipped in Q2 last year ahead of the first “normal” Halloween since the start of the COVID-19 pandemic, JAKKS’ Disguise costumes business saw net sales dip 32% this time around. Disguise shipped $49 million in costumes in the second quarter as retailers are placing smaller orders later in the year.
About the success in Action Play & Collectibles, Berman notes long-term progress.
“We have steadily rebuilt this business over the past three years extending and expanding our long-standing relationships in the gaming space and partnering with companies like Nintendo and SEGA to extend their franchises to create compelling products for their theatrical and streaming releases,” he says. “Through the first half of the year, our Action Play division has grown to be 84% of our market-leading Doll and Role Play division, balancing our portfolio substantially.”
Q2 earnings per share (EPS) hit $1.26 compared to analyst estimates of $0.51.
