JAKKS Pacific is heavily backing its Disney partnership and the boost in toy sales it expects to see over the course of the year, driven in part by the “extraordinary success of Disney+” and its new model of delivering content in the midst of the pandemic.
The toy firm highlighted its expectations to see a ‘return to more normal patterns of shopping,’ as it sets its sights on improved quarterly and full year results for the year ahead.
This week, JAKKS Pacific reported a 16 per cent drop in its fourth quarter 2020 net sales to $128.3 million, down from the $152.5 million the year prior. The decline, it says, was driven primarily by lower sales of Disney’s Frozen and Frozen II products, which were strong contributors to Q4 sales in 2019.
Net sales on the toys and consumer products segment were down 19 per cent globally, but were up 13 per cent with the exclusion of its Frozen merchandise.
Somewhat surprisingly, despite the restriction imposed by lockdowns across its major markets, fourth quarter net sales of Disguise Halloween costumes increased 91 per cent.
According to JAKKS Pacific’s chairman and CEO, Stephen Berman, fourth quarter results exceeded expectations for sales, gross margin, operating income and adjusted EBITDA.
In a statement issued this week, he cited “strong sales increases in Disney Princess, Nintendo, Sonic the Hedgehog, and Disguise costumes.”
“Since JAKKS was founded over 26 years ago, we have focused on proven play patterns and working with license partners with highly recognisable brands, and we believe this focus served us well in 2020 as parents of kids spending so much more at home were looking for products they knew and brands they trust,” Berman continued.
“Our efforts during the quarter, as they were all year, were directed at managing costs, ending 2020 with clean inventory, and preserving cash. This discipline allowed us to post the highest full year gross margin rate since 2016, and the highest fourth quarter gross margin rate in ten years.”
Looking at the year ahead, and JAKKS Pacific remains optimistic that results will improve as the world begins to emerge from the pandemic. The firm is also heavily backing its partnership with Disney and a slate of licensed releases this year, including Disney’s Raya and the Last Dragon, and Encanto.
“In addition, we believe that the extraordinary success of Disney+ has given families all over the world year-round access to Disney content, which will help keep kids connected to the characters they love and to cherish the toys we make based on those characters,” said Berman.
“We expect 2021 to see a return of more normal patterns of shopping, gift-giving, and celebrating Halloween. We believe our continued emphasis on core products, margin improvement and cash preservation will lead to improved results for 2021.”