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Jun 30, 2020
JAKKS Q2 2020 Earnings Report
Net sales decreased due to store closures, but cost reductions led to improved gross margin and reduced operating expenses.
Key Takeaways
JAKKS Pacific reported a decrease in net sales for Q2 2020, primarily due to store closures related to COVID-19. However, the company managed to improve its gross margin and significantly reduce operating expenses, leading to a smaller net loss compared to the same period last year.
Net sales decreased by 17% to $78.8 million due to COVID-19 related store closures.
Toys/Consumer Products segment sales declined 4%, while Disguise segment sales decreased 38%.
Gross margin improved to 21.3% from 18.6% due to lower product costs.
Operating expenses decreased by 27% due to cost reduction initiatives.
Forward Guidance
The company aims to focus on proven brands, maintain low costs, and preserve cash in the second half of 2020 to set up for a strong 2021.
Positive Outlook
- Focus on proven, evergreen brands and categories
- Keep costs low
- Preserve cash
- Set up the Company for a strong 2021
- Retail POS was up mid-teens through June
Challenges Ahead
- Uncertainty among retailers with regard to Halloween
- Taking a more cautious approach to credit risk
- Consumers will celebrate Halloween with lower levels of spending
- Retail inventories were down mid-to-high teens at mid-year
- Impact of competitive products and pricing
Historical Earnings Impact
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Avg. Return Before/After Earnings
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