JAKKS Pacific Inc.
) adjusted loss of $1.23 per share in the first quarter of 2013
was substantially wider than the Zacks Consensus Estimate of a
loss of 84 cents per share and the year-ago adjusted loss of 59
cents per share. Loss per share was also wider than the company's
expected range of 83-85 cents loss per share. The unexpected
delay of a tax benefit of 24 cents per share as well as margin
contraction hurt the company's results.
On a reported basis, including legal and financial advisory
fees and expenses, JAKKS Pacific suffered a loss of $1.26 per
share versus a loss of 62 cents per share in the year-ago
JAKKS Pacific's revenues grew 6.4% year over year to $78.1
million in the first quarter, beating the Zacks Consensus
Estimate of $70.0 million. Net sales surpassed the company's
guided range of $70 to $73 million.
Strong sales of core product lines helped drive revenues.
JAKKS-owned Fly Wheels, Disney Princess dolls and dress-up,
Fisher-Price ride-ons, outdoor and indoor preschool furniture,
and outdoor activity items from the Maui division were the major
contributor to sales. Management stated that the first quarter
represents 10% of its guided sales for 2013.
Gross margin in the quarter was 29.9%, down 220 basis points
(bps) year over year. The downside in margin was the result of
higher customer allowances and close-out sales.
Management reiterated its guidance for 2013. The company
expects earnings per share to be in the range of 63-68 cents per
share. Net sales are expected to increase 4.0% to 5.0% in the
range of about $694-$700 million.
JAKKS foresees a better business environment for itself in the
rest of 2013 and remains upbeat regarding the opportunities in
China. Aggressive retail promotion plans for the core line
as well as the launch of its DreamPlay product line this fall are
expected to trigger sales in the second half of the year.
We are not quite optimistic about the stock at the current
level. The company reported a wider-than-expected loss in the
first quarter, despite its revenues growing year over year and
beating the estimate. JAKKS Pacific has been faltering for
the last four quarters with its bottom line missing the estimate
in each and every quarter. The company had to bear the brunt of
JAKKS Pacific has become a victim of the change in children's
play pattern in recent years and hence needs novelty in its
product launches to cope with the change. Several of its key
products lack demand. Although the company is striving hard for
some breakthrough launches, we are yet to see any
JAKKS Pacific currently carries a Zacks Rank #5 (Strong Sell).
Two of the major toy companies
) beat estimates on both counts in first quarter 2013. Another
LeapFrog Enterprises Inc.
) is slated to report its earnings on May 2.
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