JAKKS Reports Costume Segment Growth Amid Net Sales Drop in Q3 2021

jakks pacific inc. logo 2021

JAKKS Pacific reported net sales of $237 million in Q3 2021, down 2.2% from $242.3 the prior year. Net sales in the toys and consumer products segment dropped 7.7% globally, while net sales of costumes increased 16.4% from Q3 2020 and 21.2% for the first nine months of 2021, compared to the same period last year.

According to JAKKS Pacific CEO Stephen Berman, supply-chain disruptions impacted the company’s results in the third quarter.

Berman explained that the decline in net sales was not a result of lack of customer orders or retail sell-through.

“We attribute it to logistical delays in customers picking up FOB China orders and the extended timelines to deliver inventory into our U.S. and European warehouses for domestic replenishment,” Berman said.

Meanwhile, year-to-date total company net sales were $433.2 million, up 11.8% from the previous year. Gross margins were up to 31.6% from 30.8%. Berman said that the company’s focus on improved product margins and sell-through rate helped to mitigate higher ocean freight expenses.

“Retail sales of our products remained strong in the third quarter. Our top three U.S. customers in the aggregate reported an increase in year-to-date toy POS sell-through just above 9% through the first nine months, with a slight acceleration in Q3. JAKKS was started as an FOB business and we continue to do over 50% of our sales that way today,” Berman stated. “This focus has benefited us all year, inclusive of Q3, leveraging the supply-chain strength and scale of the major global retailers to pull our product through to the retail shelf during this period of significant supply-chain disruption.”

The costume segment was the company’s strongest performer, totaling $64 million in net sales in the third quarter. JAKKS is the parent company to costume manufacturer Disguise, Inc.

“We are pleased to show progress on profitability despite the continuation of the pandemic and related challenges. As we hoped, consumers have embraced the Halloween season this year with a burst of pent-up demand,” Berman said. “Sell-through rates are exceeding 2019 levels.”

Going into Q4, the company plans to introduce a number of key holiday items including the Nintendo Super Mario Deluxe Bowser’s Airship Playset and Sonic the Hedgehog Giant Eggman Robot Battle Set.

“We have accelerated our imports of inventory to support sales in the U.S. and internationally for the holiday season and resetting for the new year,” Berman said. “Consistent with recent quarters, we continue to see tremendous consumer and customer reaction to our current product line-up, but supply-chain bottlenecks weighed on our results.”

See the full financial report here.