Disguise Sales up 19% in Q3

Jakks Pacific has disclosed its financial outcomes for the third quarter ending on September 30, 2023, achieving the highest gross margin level exceeding 32% since 2011.

While overall net sales for the quarter were $309.7 million, marking a 4% year-on-year decrease, costume sales saw a notable upswing at $63.7 million, representing a 19% year-on-year increase for Q3. However, the year-to-date costume sales amounted to $122.3 million, reflecting a 9% year-on-year reduction.

The gross profit for Q3 surged to $107 million, exhibiting a 16% increase compared to $91.9 million in Q3 2022.

Jakks Pacific's CEO, Stephen Berman, acknowledged the resilient performance amid a retail slowdown. Retail sell-through at the top three U.S. accounts reported a low single-digit decline on a year-to-date basis, with a concurrent 20% year-over-year inventory reduction at those accounts. The supply chain's improved predictability and lower promotional activity contributed to significantly enhanced product margins.

Looking ahead, Berman expressed anticipation for the holiday season and highlighted exceeding internal expectations for the full year. He emphasized the careful navigation given ongoing uncertainties about consumer behavior.

The costumes business, while down 9% in year-to-date shipping compared to 2022, demonstrated a global upswing, standing at +24% versus the same period in 2021, coupled with improved margins. The assessment of the 2023 U.S. Halloween shopping season revealed a slightly softer overall performance. Jakks Pacific aims to maximize its presence in the EU, leveraging the strength of its product line.

During Q3, the company inaugurated its new office and internally operated warehouse in Italy, poised to serve the market and Southern Europe more effectively from 2024. Berman commended the team for delivering consistent and exceptional results, emphasizing the focus on providing relevant toys, costumes, and consumer products for today's children. Jakks Pacific's evergreen category assortment and robust product lines contribute to its financial strength and resilience.