Sanrio Launches Hello Sanrio at SDCC
Sanrio announced the launch of its new brand Hello Sanrio, which is unveiling at Comic-Con International: San Diego (SDCC). Hello Sanrio is a new lifestyle brand that offers an immersive world uniting multiple characters and fans through unique products and digital content.
Hello Sanrio marks the first time that the company has premiered a new multi-character brand via digital content. The new Hello Sanrio brand features offers fans many avenues for engagement at Comic-Con International: San Diego and beyond, including an immersive, digital kawaii community created through a suite of lifestyle apps (Say Hello!) where multiple characters from the company’s deep design legacy can interact and showcase their unique personalities.
Created in partnership with Hyper Hippo Games, initial content will feature Hello Kitty, Keroppi, Chococat, Badtz-Maru, My Melody, Pompompurin, Gudetama, Little Twin Stars, and Pochacco with more characters to follow. The suite of apps will also connect fans, providing a platform where they can communicate, express themselves, experience the Sanrio universe in their own unique way, and learn about special product launches and promotions.
Hello Sanrio product will include apparel, accessories, stationery, and collectibles, launching for holiday in select Sanrio stores and at sanrio.com.
Wild Republic Gets New Look
Wild Republic launched a new logo aligning with the growth of the company. Wild Republic has stood for nature education, inspiration, and creative, adventurous fun for nearly four decades. Now, Wild Republic gets a grown-up look that merges the old with the new and sets the course for continued international growth. The previous logo launched in 1999 with its popular hanging monkey line. The Wild Republic logo was ultimately adopted to represent the company’s entire line of stuffed animals and toys.
Mattel Reports Q2 2016
Mattel reported worldwide net sales were down three percent, and down one percent in constant currency, for Q2 2016 versus 2015. Worldwide gross sales were down four percent and down one percent in constant currency. Reported operating loss was $11.7 million, and adjusted operating income was $6.2 million. Reported net loss per share was $0.06, and adjusted loss per share was $0.02.
Second quarter net sales in the North American Region, which consists of the U.S., Canada, and American Girl, increased by three percent and in constant currency, versus 2015. In the International Region, net sales decreased by 10 percent, and were down four percent in constant currency. Second quarter gross sales in the North American Region increased by one percent and in constant currency. In the International Region, gross sales decreased by nine percent and were down three percent in constant currency. Gross margin decreased 260 basis points, driven mainly by the negative impact from changes in currency exchange rates. Reported other selling and administrative expenses decreased $17.1 million and adjusted other selling and administrative expenses decreased $16.8 million, reflecting continued cost improvement initiatives.
Reported operating loss for the quarter was $11.7 million, compared to the prior year’s reported operating income of $0.6 million. Adjusted operating income for the quarter was $6.2 million, compared to the prior year’s adjusted operating income of $18.8 million.
The Company’s debt-to-total capital ratio as of June 30, 2016 was 48.2 percent.
For the quarter, net cash flows used for operating activities were approximately $241 million, flat to the prior year, primarily driven by a higher net loss offset by lower working capital usage. Cash flows used for investing activities were approximately $124 million, a decrease of approximately $37 million versus the prior year, primarily driven by changes in foreign currency forward exchange contracts. Cash flows used for financing activities and other were approximately $210 million, compared to approximately $269 million in 2015.
The Board of Directors declared a 2016 third quarter cash dividend of $0.38 per share, which is flat compared to the third quarter of 2015. The dividend will be payable on September 16, 2016 to stockholders of record on August 23, 2016.
Sales By Brand
Mattel Girls & Boys Brands
For the second quarter, worldwide gross sales for Mattel Girls & Boys Brands were $553.7 million, down eight percent and down five percent in constant currency, versus the prior year. Worldwide gross sales for the Barbie brand were up 23 percent and 24 percent in constant currency. Worldwide gross sales for other girls brands were down 60 percent, and 57 percent in constant currency. Worldwide gross sales for the Wheels category, which includes the Hot Wheels and Matchbox brands, were up one percent and eight percent in constant currency. Worldwide gross sales for the Entertainment business, which includes Radica and Games, were up 19 percent, and 21 percent in constant currency.
Second quarter worldwide gross sales for Fisher-Price Brands, which includes the Fisher-Price core, Fisher-Price Friends and Power Wheels brands, were $346.3 million, up three percent and six percent in constant currency, as opposed to 2015.
American Girl Brands
Second quarter gross sales for American Girl Brands were $68.1 million, down 19 percent, and in constant currency versus the prior year.
Construction and Arts & Crafts Brands
Second quarter gross sales for Construction and Arts & Crafts Brands, which includes the MEGA BLOKS and RoseArt brands, were $72.3 million, up 12 percent, and 22 percent in constant currency, versus 2015.
Jakks Reports Q2 Sales Increase
Jakks Pacific reported its financial results for the second quarter ending on June 30. Net sales for second quarter 2016 increased eight percent to $141.0 million from $131.1 million reported in the comparable period in 2015. The reported net loss for second quarter was $4.4 million, or $0.27 per diluted share, down from a net loss of $5.7 million, or $0.30 per diluted share reported in the comparable period in 2015. Adjusted EBITDA for the second quarter increased to $4 million, compared to Adjusted EBITDA of $1.5 million in 2015.
In the second half of 2016, Jakks is set to unveil several new products across a number of categories for the upcoming fall and holiday seasons. From magical dolls to mini-collectibles to radio-controlled vehicles, Jakks has a robust line-up of on-trend and engaging products for kids and kids at heart. Highlights include Northern Lights Elsa, the next iteration of its successful large-scale Frozen dolls this year that features a magical light show on Elsa’s dress; Disney Princess Magical Wand Cinderella, which features lights, sounds, and music; Gift ‘ems, a collectible mini-doll line, which features the universally known gift box to surprise girls with a “friend” from different cities around the world; XPV Skateboarding Mikey inspired by Teenage Mutant Ninja Turtles’ Michelangelo; Star Wars and DC Universe BIG-FIGS large-scale figures; new World of Nintendo action figures and vehicles; new waves of the Tsum Tsum collectible figures featuring Disney and Marvel characters; and two new additions to Jakk’s Disney line with the introduction of Elena of Avalor and Disney/Pixar’s Moana. In addition, Jakks will serve as global distributor for Glow Friends by Roxo, an innovative line of interactive light-up characters, and as U.S. distributor for Ooshies by Headstart, a line of collectible characters featuring popular licenses.
As of June 30, 2016, the company’s working capital was $216.5 million, including cash and cash equivalents of $86.7 million, compared to working capital of $232 million including cash and cash equivalents of $110.5 million as of June 30, 2015. Net cash used in operating activities for the second quarter was $11.2 million, compared to net cash provided by operating activities of $11.5 million in Q2 2015.
For 2016, Jakks continues to forecast net sales to increase seven percent to approximately $800 million; diluted earnings per share to increase 10 percent to approximately $0.78 per share, subject to share count changes; and Adjusted EBITDA to increase 28 percent to approximately $65 million. This guidance reflects anticipated gross margin expansion and operating margin growth in 2016.
In June 2015, the Board of Directors authorized the company to repurchase up to $30 million worth of shares of the company’s outstanding common stock and/or convertible notes. Approximately 3.2 million shares of common stock at an aggregate cost of $25.2 million, $0.7 million face amount of its 2018 convertible notes at a cost of $0.7 million and $2.0 million face amount of our 2020 convertible notes at a cost of $1.9 million were repurchased through the end of the second quarter. At quarter-end, approximately $2.2 million remained available in the current buy-back authorization.
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