Toy maker Jakks Pacific Inc. reported a second quarter loss on lower sales on Wednesday. It also cut its full-year forecast and announced plans to cut jobs, driving shares down 22 percent in after-market trading.
After the markets closed, the Malibu company reported a net loss of $46.9 million ($2.14 a share), compared with net income of $214,000 (1 cent) in the same period a year earlier. The company, which bases many of its products on licensed characters and brands, took charges that included a license minimum guarantee shortfall of $14.1 million and an inventory impairment of $12.2 million.
Net sales fell 27 percent to $106 million. Chief Executive Stephen Berman said lower orders from major retailers were a problem, and that a cooler summer stunted seasonal toy sales, resulting in greater retailer discounting to prepare for the back-to-school season.
“Several retailers, both in the United States and in Europe, are struggling and have substantially decreased their orders,” Berman said in a statement. “In addition, the poor performance of several of our key properties, including Monsuno and the Winx Club, also contributed to the decline.”
Jakks cut its sales outlook to $620 million, down from a range of $694 million to $700 million, and now expects to report a loss of about $2.56 a share for the full year. It earlier expected a profit of 63 cents to 68 cents a share.
In a separate release, Jakks said it planned to offer $100 million in convertible senior notes, due in 2018, in a private placement. It did not identify the potential purchaser, but the company’s largest single shareholder is biotech billionaire Dr. Patrick Soon-Shiong, who controls a roughly 14 percent stake in the company. His NantWorks LLC tech holding company is in a joint venture with Jakks to develop digital “smart” toys, which is just getting off the ground.
Berman said the company has high hopes for the DreamPlay line it is developing with NantWorks, but will need to cut positions in other parts of the company in the near term to weather the current economic situation. It did not detail how many jobs would be affected.
Shares earlier closed up 1 cent to $11.48 on the Nasdaq, but fell 22 percent in after-market trading.
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