Toy maker Jakks posts disappointing earnings

MALIBU, Calif. — Toy maker Jakks Pacific reported that net sales for the fourth quarter of 2012 were $133.5 million, compared with $141.1 million reported in the comparable period in 2011.

The reported net loss for the fourth quarter was $119.5 million, or $5.45 per diluted share. This compares with a net loss of $20 million, or 77 cents per diluted share.

Stephen Berman, president and CEO, Jakks Pacific, Inc. stated, “We are disappointed by our performance in the fourth quarter. The difficult and challenging toy environment did not generate the sales that had been anticipated, and several of our key products did not achieve the sales levels that we had planned for, also resulting in license royalty minimum guarantee shortfalls.”

“However, we are optimistic for our future growth and profitability. We believe that our core business lead by our infant/preschool, seasonal and Halloween segments, in conjunction with meaningful reductions in operating costs, will return the company to profitability in 2013.”

Berman continued, “We believe that the difficult environment for toys in 2012 resulted from rapid changes in children’s play patterns as tablet and smartphone devices and interactive games and toys have more and more become cornerstones of their play and fun experiences. We recognize that it is critical for us to provide new, more exciting and magical experiences for today’s child compatible with these new play patterns. We believe that our partnership with NantWorks in creating our DreamPlay line of toys using NantWorks proprietary iD recognition technology will place JAKKS in the forefront of the play revolution we are witnessing.”

“We believe that applying this technology to a broad array of characters and play patterns will create new consumer demand for Jakks products and will help Jakks achieve substantial long range growth and profitability, warranting the investment in technology and content that we are making.”

For 2013, the company anticipates an increase in net sales of 4% to 5% to approximately $694 million to $700 million, with diluted earnings per share in the range of approximately 63 cents to 68 cents. This guidance anticipates first-quarter 2013 net sales in the range of $70 to $73 million, with a loss per share in the range of 83 cents to 85 cents.