Toy maker
JAKKS Pacific Inc.
's (
JAKK
) adjusted loss of 65 cents per share in the first quarter of 2012,
was considerably wider than the Zacks Consensus Estimate of a loss
of 61 cents. The quarterly results also deteriorated considerably
from the year-ago earnings of 40 cents per share and was below
management's guidance of 61 cents to 64 cents loss.
On a GAAP basis, reported loss of 62 cents per share was well
below the year-ago quarter's loss of 39 cents. The company's
revenue nudged up 1.5% year over year to $73.4 million in the first
quarter.
Losses take into account additional operating expenses
associated with the recent acquisition of Moose Mountain, which was
also in a seasonally feeble sales volume quarter, as well as
marketing expenses associated with the launch of the Monsuno
product line.
Total selling, general and administrative expenses in the first
quarter of 2012 rose to $43 million, or 58.5% of net sales from
$39.1 million, or 54% of net sales, last year. Gross margin in the
quarter was 32.1% versus 33.6% in the comparable period last year.
The decline in margin can be attributed to a shift in product mix
resulting in higher royalty expense. However, lower product cost
and tooling amortization compensated the fall to some extent.
Financial Position
At quarter-end, JAKKS had cash and cash equivalents and
marketable securities of $254.8 million versus $257.5 million at
December 31, 2011. The company also announced a quarterly cash
dividend of 10 cents per share, payable on July 2, 2012 to
shareholders of record as of June 15.
Guidance
For 2012, JAKKS forecasts adjusted earnings in the range of
$1.01 to $1.07 per share. The company expects sales in the range of
$720-$728 million, implying a growth of 6.2% to 7.4%.
The company foresees a better retail sales environment in 2012
and remains upbeat regarding its strong product line-up. Management
also remains optimistic on the recent re-launch of the Monsuno toy
line, which has been greatly accepted at the retail level.
Our Take
We remain optimistic on JAKKS' long-term growth potential with
product launches and strong financial condition. However, cost
inflation continues to hurt the company.
JAKKS Pacific currently retains a Zacks #3 Rank, which
translates into a short-term Hold rating. We are also maintaining
our long-term Neutral recommendation on the stock.
One of JAKKS' primary competitors,
Mattel Inc.
(
MAT
) reported first quarter earnings of 6 cents per share, missing the
Zacks Consensus Estimate by a penny.
JAKKS PACIFIC (
JAKK
): Free Stock Analysis Report
MATTEL INC (
MAT
): Free Stock Analysis Report
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