Jakks sees '09 loss, expects Q1 sales dip

By Staff -- Gifts and Dec, March 3, 2010

MALIBU, Calif.—Jakks Pacific reported losses for the fourth quarter and full year 2009, hurt by double-digit sales declines and the impact of various charges.

Net sales for the fourth quarter fell 26 percent to $198.8 million while sales for the full year were $803.7 million, down 11 percent from 2008’s total.

The toymaker’s net loss for the fourth quarter of 2009 was $1.9 million, or $0.07 per share, compared to net income of $16.9 million, or $0.55 per diluted share, reported in the fourth quarter of 2008.

For the full year of 2009, Jakks reported a net loss of $385.5 million, or $14.02 per share, compared to a $76.1 million profit in 2008. 2009’s full-year results were hampered by nearly $499 million in pre-tax charges, without which the company would have reported net income of $30.2 million.

Operations provided cash worth $109.5 million for the full year of 2009. As of Dec. 31, 2009, the company’s working capital was $349.4 million, including cash and equivalents and marketable securities of $255.0 million.

Commenting on the result, Jack Friedman, Jakks’ chairman and co-CEO, said: “We continue to operate in a challenging retail environment, making operational efficiencies a top priority, as we simultaneously work to develop new and compelling consumer products to strengthen our portfolio for future growth. Our cost reduction plan is well underway, and we continue to evaluate potential acquisition opportunities, which is a key component of our growth strategy. We are directing all of our efforts company-wide to maximize profitability on the lower revenue base we are expecting for 2010, with a goal of growing the top line back to historical levels in the long-term.”

In addition to its financial results, the company announced that Friedman planned to step down as co-CEO on April 1, but would continue as Chairman and serve as Chief Strategist. At that time, Stephen Berman will become sole CEO and continue as President.

Looking forward, Friedman said the company anticipates 2010 diluted earnings per share in the rage of $1.10 to $1.20 on net sales of approximately $660 to $670 million. The company forecasts first quarter net sales in $70 - $74 million range, down from net sales of $108.7 million in 2009’s first frame.

As for reaction to its 2010 product lineup, Berman added: “We have a diverse portfolio of products that has been well received by our customers at the recent Toy Fairs. We believe a number of new initiatives and product lines have great potential, including our SpyNet line, new Halloween initiatives, several new Disney initiatives, new doll lines, and others, but we do not expect the new additions to completely offset declines in revenues of our Hannah Montana product line and resulting from the end of our WWE licenses, along with the elimination of a number of unprofitable and underperforming lines that were in the 2009 portfolio.”

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