Jakks Pacific is having a record year.
In the first nine months of 2022, the company pulled in net sales of $664.3 million, a number that exceeds all of 2021 ($621 million). Net sales in the third quarter spiked 36% versus the same period last year powered by a 56% sales boom in toys and consumer products.
During its Q3 earnings report, Jakks echoed other major toymakers in emphasizing that this holiday season will see a return to promotional activities to drive consumer demand in support of a robust product lineup from coast to coast.
“We continued to see strong retail sell-through for our product throughout the third quarter. Our top three toy accounts in the U.S. sustained point-of-sale results in the high teens in Q3 as we head into the all-important fourth quarter,” says Jakks Pacific CEO Stephen Berman. “By leaning into our heritage as an FOB-first company, we’ve managed to ship more of our product earlier in the year to avoid excessive supply-chain expenses and mitigate out-of-stock risks at retail. As a result, our customers are ready for the holiday season with a great range of product and promotional plans. We are on track to deliver full-year 2022 revenue growth of around 20% versus the prior year for the second year in a row, which are exceptional results that the team and I are very proud of.”
The company’s Disguise costumes division hit a sales snag with a 17% dip for the quarter, but year-to-date sales are up 36% over last year. Jakks attributes the Q3 dip to earlier ordering this season.
“In addition to the strength in our toy segment, our costume business is also performing at a very high level. We have already shipped 25% more costumes this year than the amount we shipped in all of 2021,” Berman says. “Q3 2022 Disguise costumes sales were down compared to Q3 2021 as Halloween customers ordered products earlier this year. We are on track for our biggest year with Disguise since Jakks acquired the company in 2008, and we are also excited about that momentum continuing into 2023.”
Across the board, Jakks Pacific has made improvements in its business, including less debt and more operating cash on hand. Due to inflation and the increased cost of doing business, Jakks experienced a slight hit to gross margin in Q3.
New Content and Partnerships = New Toys
On a call with investors and analysts yesterday, Berman was joined by Chief Financial Officer John Kimble to discuss Q3 earnings and provide a look into the future of the company.
Berman says that Q4 is off to a strong start, with one particular item standing out.
“Consumers began to think more [early] about the holiday shopping season, we are seeing some good numbers in October as well across all of our major product lines,” Berman says. “A special shout out to our Target Toy Shopping Cart with our Perfectly Cute range. It’s a tremendous item that the team worked on with Target. It’s a Bullseye’s Top Toy pick and has been flying off the shelf.”
Disney’s Encanto continues to fuel new products from Jakks Pacific and the company has a few other major initiatives on deck that are tied to Disney content.
Jakks Pacific will release new toys and roleplay products inspired by Disney’s live-action The Little Mermaid and next fall’s animated feature, Wish. Additionally, the company is taking part in the Disney 100 Years of Wonder campaign with a range of collectible figures in three sizes.
Additional products include Disguise support for Hasbro’s Dungeons & Dragons: Honor Among Thieves and Transformers: Rise of the Beasts and a refreshed lineup of figures and plush inspired by SEGA’s Sonic the Hedgehog.
