JAKKS Pacific (NASDAQ: JAKK) reported Q2 EPS of ($0.72), $0.23 worse than the analyst estimate of ($0.49). Revenue for the quarter came in at $105.8 million versus the consensus estimate of $117.12 million.

Management Commentary

JAKKS Chairman and CEO Stephen Berman stated, “As expected, during the second quarter we continued to see the impact of the liquidation of Toys R Us, which offset the positive contribution of several successful products, including Incredibles 2, Squish-Dee-Lish®, and MorfBoard®. The net sales declines of 11.5% in the quarter and 7.1% year-to-date were primarily the result of the loss of sales to Toys R Us and the short term disruption from its stores’ liquidation throughout the marketplace.”

“We saw expected declines in several properties that were driven by unusually strong entertainment content a year ago, but we were pleased with the performance of new product segments. The investments in the C’est Moi™ and MorfBoard® brands continue to show momentum as distribution broadens.”

“Despite the fact that international sales were negatively impacted by the loss of Toys R Us in many Europe and Asia Pacific markets, we saw a sales increase of over 25% in the second quarter of this year compared to last year, due in part to our geographic expansion, new warehouses, and the launch of Incredibles 2 and Squish-Dee-Lish®.”

“As we look ahead to the second half, we will continue to focus on cost management and on new product launches. Our Fall lines are moving forward as planned and we have a strong line-up of new product introductions that are a balanced mix of owned IP and licensed brands, including MorfBoard® Xtensions, Real Workin’ Buddies® Mr. Banks, Squish-Dee-Lish®, Perfectly Cute™, TP Blaster™, Fancy Nancy, Incredibles 2, and Mega Man.”

2018 Outlook

The Company believes the market disruption and lingering effects of the Toys R Us bankruptcy and liquidation in the United States and internationally will continue to persist into the second half of 2018, and will likely result in a decline in net revenues in 2018 when compared to 2017.

For earnings history and earnings-related data on JAKKS Pacific (JAKK) click here.