Disappointed 4Kids pins hopes on Chaotic

Firm reports decline in sales, but Chaotic TCG performs in line with expectations.
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Blaming the economic climate, 4Kids reported net profits for the fourth quarter 2008 of $14.3 million, compared to $16.5 million for 2007. The company’s net loss was $19.6 million, or $1.48 per share, as compared to $16.8 million, or $1.26 per diluted share in 2007.

For the full year net sales totalled $63.7 million, compared to $55.6 million for the same period in 2007. Profit for the year included approximately $15.3 million from the sale of Chaotic trading cards.

Alfred R. Kahn, chairman and CEO, 4Kids Entertainment commented: “While we are extremely disappointed by our results for 2008, we implemented significant cost cutting initiatives in the fourth quarter of 2008 and the first quarter of 2009 that we expect to reduce our operating costs by $25 million in 2009 as compared with 2008.”

Chaotic performed in line with expectations in the first nine months, falling below expectations in Q4 to sales of $0.5 million. The firm attributed this dip to an effort from retailers to reduce their inventories during difficult trading conditions.

Despite the falling fourth quarter sales numbers, Chaotic still finished 2008 as the number three selling trading card game in the US behind Pokémon and Yu-Gi-Oh! and 4Kids remains hopeful that Chaotic will continue to perform well this year.

Kahn continued: “Looking forward, we believe Chaotic still offers a tremendous opportunity for 4Kids in the future as we roll out the Chaotic trading cards in the UK, France and Germany during the first half of 2009. Chaotic will also be bolstered by the revised and improved Chaoticgame.com website that went live on March 3 and is now available in English, French, German, Spanish and Italian.

“We also expect additional Chaotic licensed products to be available from our master toy licensee, Spin Master, and our videogame partner, Activision Publishing.”

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