On Thursday, Jakks Pacific (NASDAQ:JAKK) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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Summary
Jakks Pacific is confident about achieving its goals for the year and setting up for a stronger 2027, with a significant focus on the anime product line launching in 2027 and some shipments in 2026.
The company is expanding its product lines with successful tie-ins to major movie franchises like Super Mario, Toy Story, and Paw Patrol, and is experiencing strong sales in its Disney product lines.
International growth is a priority, with significant expansion in Europe and Latin America, supported by new distribution centers.
Jakks Pacific is focused on maintaining the right price points for different markets, with a majority of products in the $10 to $30 range, while preparing for high-demand holiday products.
Management is considering capital allocation carefully, with a focus on potential acquisitions and supporting new initiatives, while maintaining cash reserves due to market uncertainties.
Full Transcript
OPERATOR
Launch expected in 2027. We are only a third of the way through the year and although it continues to be very dynamic, we feel confident we are still on track to achieve our goals for this year, inclusive of setting up for an even better and stronger 2027 and beyond. And with that we will take a couple questions. Operator, thank you very much.
Thomas Forte (Equity Analyst)
Great, thanks Steven and John, thanks for taking my questions. I’ll limit myself to three and I’ll go one at a time. So Steven, the anime product line sounds amazing. Can you give just high level comments on what success could look like, including the relative gross margin and contribution margin for that product versus your other efforts?
Steven
Good afternoon Tom, and thank you. So firstly, this initiative that we undertook has been well over two years working with many of these companies that are in Japan and the way that the companies oversee their IP is very stringent and very strict. So we went to them to various large enterprises. Aniplex, which is Demon Slayer, Viz Media, Naruto, Kodansha which is Attack on Titan and several others from KADOKAWA Corp. And Crunchyroll. It’s been a long time process of making sure that when you create products in this genre it has a very strong fan base that you got to really focus on and cannot veer from. So we had put together a plan. We hired across the board a very young passionate group in the anime manga and called Digital Marketers and we put together a plan of products from collectibles to kid adults which is very strong, to somewhat of some of the other properties to tech accessories areas that the fan base really likes. In fact, for the VTubers and digital marketers, we created light sticks for them to use at concerts, but all with the authenticity of the actual IP and directed toward the fan. So the launch itself is starting in 27. We will get some of it shipped in 26. It’s a very broad launch to various initiatives of retail basis. So think of Miniso, GameStop, independent retailers as well as venue sales. A lot of these concerts, movies and initiatives are done in venues and there’s never been real authentic merchandise at the venue. So we have structured and working with several different partners to do the Venue sales as what you would see at concerts, like at a Taylor Swift concert or a Kendrick Amar where you have the merchandise that goes straight to the consumer. So all these initiatives are all being really launched together at one time in various segmentations and with various collective initiatives with each of the IP holders, but inclusive, you will see a broad array of product of totality of all the strong anime, manga and VTube IP in one segmentation. At retail, instead of having one licensor do one IP and another one, we’ve collectively worked with these IP holders to make sure that they were present and they were present and focused together so the consumer knows where to buy them. On the part of margin enhancement, because they’re somewhat more focused on kid adult, the price points will be slightly higher and the margin in our area for Jakks Pacific will be slightly higher.
Thomas Forte (Equity Analyst)
Excellent. All right, so then, second of three. I recognize a lot of your product releases are coinciding with movie premieres, but was wondering for your other SKUs, how should we think about the timing of new product rollouts and if you’re holding anything back given the current market challenges?
Steven
First, the market challenges. As we mentioned in our prerecorded we’re used to these challenges. It happens. It’s happened. Jax has been public 30 years. We’ve been around 31 years. So you have to kind of work through them, work with manufacturers, work with container companies, work with the retailers and work very closely and very entrepreneurial to get through these different times. But with these different times there’s also very strong opportunities. So as we mentioned in our call, the Super Mario Movie itself is done phenomenally well. The product …
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