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JAKKS Pacific (JAKK) Q3 Earnings & Sales Miss, Stock Falls

Shares of JAKKS Pacific, Inc. JAKK declined 9.6% in yesterday’s trading session, after the company reported lower-than-expected numbers in the third quarter of 2017.

The company’s earnings of 53 cents per share were lower than the year-ago quarter figure of 82 cents by 35.4% and the Zacks Consensus Estimate of 85 cents by 37.7%.

JAKKS Pacific’s revenues also declined more than 13% year over year to $262.4 million, primarily owing to the pause in shipments to Toys ‘R’ Us as a result of the retailer’s bankruptcy filing. The top line lagged the Zacks Consensus Estimate of $289.3 million by 9.3% as well.

Behind the Headline Numbers

Adjusted gross margin in the third quarter was 29.7%, down 170 basis points (bps) year over year, given the impact of closeout and other low-margin sales in the period.

Adjusted EBITDA was $38.6 million compared with $42.8 million in the quarter a year ago.

2017 View

For 2017, JAKKS Pacific expects to incur a net loss as well as negative earnings per share. Moreover, though the company continues to expect positive adjusted EBITDA for the year, the figure is anticipated to decline year over year, on lower net sales.

Markedly, the company had issued this above-mentioned altered guidance on Sep 20, 2017, taking into consideration the impact of bankruptcy declared by Toys ‘R’ Us.

Meanwhile, JAKKS Pacific continues to anticipate future growth and profitability through its efforts to enter new categories, create a strong portfolio of new and existing licenses, develop owned IP and content coupled with the ongoing margin enhancement and operating cost containment initiatives.

Zacks Rank & Peer Releases

JAKKS Pacific carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other toymakers, Hasbro Inc. HAS and Mattel Inc. MAT recently reported second-quarter results. While Hasbro surpassed the bottom and top line estimates, Mattel lagged the same.

Electronic Arts, Inc. EA is slated to release its quarterly numbers on Oct 31. The Zacks Consensus Estimate for the quarter’s earnings is pegged at 54 cents.

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