In Jakks Pacific’s Q3 2016 results, net sales for the third quarter were $302.8 million compared to $337.0 million in the third quarter of 2015.
The firm attributes the decline to the suspension of shipments by Jakks to a major US customer, the negative impact of the Brexit vote, a timing lag in international sales caused by shifting to direct-to-retail distribution and lower-than-expected sales of some movie-licensed products.
“In the third quarter, most of our product lines performed as expected, but we made the decision to suspend sales to a major US customer that is experiencing challenges.” said Jakks Pacific chairman and CEO Stephen Berman.
"In addition, the negative impact of the Brexit vote and the subsequent sharp drop in the value of the British pound decreased the purchasing power of our customers. The expansion of our direct-to-retail international sales network also caused sales to be recognised later in the year.
"Finally, we faced pressure from disappointing sell-through of some licensed product lines tied to motion pictures which did not meet expectations. Our gross margins, however, were relatively in line with our internal forecast.”
In the US, Q3 saw Jakks enjoy strong consumer demand for Tsum Tsum and Gift ‘ems collectables, Nintendo figures and plush, and Disney Princess products.
Looking ahead, the firm has strong expectations for fourth quarter sales of several Disney properties, including Pixar’s Moana movie-inspired toys, Elena of Avalor dolls and role play toys, the Frozen Northern Lights Elsa doll, and Star Wars Rogue One Big-Figs.
Berman added: “Looking ahead to 2017, we currently expect to see revenue growth coming from three areas. First, our existing core business should continue to benefit from the introduction of exciting new products based on owned IP as well as licences, and the continued expansion into new geographies.
"Second, we recently announced the acquisition of C’est Moi, a new and rapidly growing maker of skin care and makeup products aimed at kids engaged in the performing arts. Third, we have launched Studio JP, a joint venture with our Chinese distribution partner Meisheng Culture & Creative Corp., to produce high-quality, animated content based on owned IP.
"All three areas are part of our ongoing effort to add faster growth and higher margin sources of revenue to our sales mix. We have just finished our fall 2017 toy preview with customers from around the world, and we are also encouraged by the positive response to both our spring and fall product lines.”