Without the rise of top-grossing children's movies like “The Super Mario Bros Movie” and “The Little Mermaid” last year, sales at JAKKS Pacific fell 16% in the first quarter to $90.1 million, which resulted in a loss of $1.09 per share. The repercussions spread to the rest of the company's performance. in the first quarter with increased inventory obsolescence and retailer markdowns, resulting in a 580 basis point loss in gross profit margin.
With a loss of $14.2 million, the adjusted EBITDA loss widened to $17.2 million from $1.16 million in the prior-year quarter and adjusted EBITDA as a percentage of net sales plummeted to negative 19.1% from negative 1.0%, a decline of more than 1,800 basis points.
“Over the past two years we have had the added benefit of a strong slate of films adding to our strong core business. Without that new news in spring 2024, from a shipping and retail perspective, we experience lower levels of both as expected,” JAKKS Pacific CEO Stephen Berman said, adding that the company also sees “a weakening demand for products from the release of a movie in the fourth quarter of 2023. ”
During the company's fourth-quarter earnings call, Berman warned that light blockbuster movie volume in 2024 would lead to “somewhat weaker overall business” in its apparel segment. The reaction to the fourth quarter results sent the stock down 27%, a level from which the stock has yet to recover.
The actions are down 13% in after-hours trading on Wednesday.
