Jakks profits in '08 despite Q4 shortfall
By Staff -- Gifts and Dec, 2/18/2009 10:03:00 AM
MALIBU, Calif.—Jakks Pacific saw its annual sales grow 5 percent in 2008—despite a 6 percent drop in sales during the year’s fourth quarter—on its way to a $76 million profit.
Jakks’ net sales for the year were $903.4 million. Net income for 2008 was $76.1 million, or $2.42 per diluted share, down from earnings of $89 million, or $2.77 per diluted share for the year ended Dec. 31, 2007.
The results followed a fourth quarter in which net sales slipped 6 percent to $269.3 million and net income fell 49 percent to $16.9 million, or 55 cents per diluted share.
“In 2008, we continued to have top selling items in our portfolio that performed well for our retail partners, including our award-winning EyeClops Night Vision Goggles, Girl Gourmet product line, Disney pretend play products and others. However, sales in the fourth quarter were impacted by a challenging economy, particularly in the retail sectors in which we experienced declines in some lines, including Hannah Montana and Care Bears," said Jack Friedman, Jakks’ chairman and CEO. “Earnings in the year were also adversely impacted by rising costs of labor, raw materials and testing that affected margins across the board.”
During 2008, the toymaker completed three acquisitions: Halloween costume maker Disguise, baby doll and accessories maker Tollytots, and children’s furniture and room décor company Kids Only.
“While we do expect to take time to fully digest and integrate our recently acquired divisions, we will continue to evaluate potential acquisition opportunities, while concurrently executing on internal growth and cost-saving initiatives,” Friedman said.
In addition to its financial results, Jakks announced that Stephen Berman, the toymaker’s president and chief operating officer, has been promoted to co-CEO. He will continue as president while Friedman continues to serve as chairman. The move was needed in order to “meet the needs of the company’s growth and acquisition strategy,” Jakks said.
Looking forward, Berman said the company expects 2009 revenue to grow to $920 million but for earnings to fall to $2.25 per diluted share on anticipated lower gross margins and increased acquisition amortization. With the positive impact of its acquisitions not expected to contribute much to Jakks’ bottom line until later in the year, the company expects an overall loss per share in the first quarter ranging from 29 to 36 cents, 27 cents of which would be attributed to charges and overhead costs related to the acquisitions.
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