Jakks Pacific reports Q3 EPS $4.53 vs. $2.96 last year

Reports Q3 revenue $309.7M vs. $323.0M last year. “Although we have seen activity at retail slowing, our business continued to perform well throughout the third quarter. Retail sell-through at our Top 3 accounts in the US were down low single digits on a year-to-date basis, while our inventory at those accounts is down over 20% year-over-year” said Stephen Berman, CEO of JAKKS Pacific. “A more predictable supply-chain and lower promotional activity than last year has resulted in significantly improved product margins, building on the continued rigor and collaboration between our development and sourcing teams. 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 carefull y navigating towards the end of the year given the persistent uncertainty about consumer behavior. Also in the quarter, we saw our Costumes business seasonality returning to more traditional levels and catching up on a year-to-date basis. Although down 9% in year-to-date shipping vs. 2022, globally, we remain +24% vs. the same period in 2021, along with significantly improved margins. Our view of 2023 Halloween shopping in the US was that it was a bit softer overall. 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 final syndicated data won’t be available until later this month. Finally, during the third quarter, we officially opened our new office and internally operated warehouse in Italy to better serve that market and Southern Europe broadly starting in 2024. We are very focused on maximizing our presence across the EU given the current strength of our product line. We nonetheless continue to proactively manage our owned inventory, increasing our internal discipline around turns and maximizing our cash position. Our Q3 ending inventory level of $68.8 million is the lowest Q3 level since 2020, down 37% from this time last year. We are always striving to improve our internal operations to remain competitive and the partner of choice for our customers, licensors and vendors.”