TOYMAKER Jakks Pacific lost a quarter of its market value on Friday (Mar 1) after saying a shortage of potential Hollywood blockbusters will hold back sales this year.
The company, which sells action figures, Halloween costumes and other merchandise tied to films, isn’t expecting a big lift from movie-related products until the fourth quarter, when new pictures from Walt Disney Co’s Moana and Paramount Global’s Sonic the Hedgehog franchises come out, chief executive Stephen Berman said on a conference call on Thursday.
“A business like our costume business is often led by the latest blockbuster films, and the relatively light volume this year tends to lead to a softer overall business,” he said.
Jakks isn’t alone. Hasbro and Mattel have both cited a weaker lineup of Hollywood films as a challenge for sales in 2024. Spin Master, which had a film released last year tied to its Paw Patrol line, said it expects sales this year to be flat, due in part to weaker entertainment-related revenue. Movie studios were forced to push back many releases due to the twin strikes by writers and actors last year. Theatre ticket sales were down 18 per cent in the US and Canada through Feb 25.
“The first half will be difficult as it will be for its peers,” Jefferies analyst Andrew Uerkwitz wrote in a note to clients after Jakks reported results.
The toy industry continues to suffer from weak consumer demand after a boom in the first two years of the pandemic. After a disappointing 2022, when retailers stocked up on too much product, toy sales fell 8 per cent domestically to US$28 billion in 2023, as merchants worked through their existing inventory.
Toys related to films are particularly crucial early in the year, when shoppers aren’t naturally drawn to toy aisles by holidays like Halloween and Christmas, said Jim Silver, chief executive at TTPM, a toy industry website. When they do come to the toy section to pick up something related to a hot film property, they sometimes purchase other toys, compounding the importance of Hollywood hits.
“You start the basket, and then you fill the basket,” Silver said in an interview.
Hasbro, maker of Transformers, GI Joe and other toy brands, expects its consumer products sales to be down as much as 12 per cent this year, following a 19 per cent decline in 2023. The company cut 1,100 jobs in December, roughly 20 per cent of staff, after letting go 800 employees earlier in the year.
Mattel, which saw a Warner Bros Discovery film tied to its Barbie doll line become the biggest motion picture of 2023, said it expects the toy industry to decline in 2024, although at a lesser rate than 2023. It has 14 other films in the works tied to its toy brands, but none are scheduled for release this year. BLOOMBERG
