JAKKS Pacific is the latest publicly traded toymaker to report third quarter earnings this season.
The company says that net sales for the quarter came in at $309.7 million, a 4% decline versus the same period last year. Its toys and consumer products business decreased 9% while Disguise, its costumes division, saw a 19% increase in sales as Halloween spending returned to a more traditional pace.
The company says that retail activity is slowing, but business continues to improve amid a 20% inventory reduction within its top three retail accounts. Additionally, the return to normalcy in the supply chain and reduced markdowns have led to the company’s best gross margin since 2011, coming in at 34.5% in Q3.
Of note, our Action Play & Collectibles business was up 43% in the quarter, and with $184.1 million shipped through Q3, is up 37% compared to last year. We are looking forward to the holiday season and have recently finished great customer meetings previewing our fall 2024 product line. We are exceeding our own internal expectations for the full-year and are carefully navigating towards the end of the year given the persistent uncertainty about consumer behavior."
As conflicting predictions for the holiday season continue to run rampant, JAKKS also indicates that some previous outlooks regarding record spending on Halloween may have missed the mark.
“Our view of 2023 Halloween shopping in the U.S. is that it was a bit softer overall,” Berman says. “We see that in our data and in referencing syndicated market data. The latter suggests we have retained and expanded our market leadership position, but the final syndicated data won’t be available until later this month.”
JAKKS Pacific did not offer an update on further guidance for the year in its earnings release.
