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JAKKS Pacific (JAKK) Inks Licensing Agreement with Chicco

Leading toymaker JAKKS Pacific, Inc. JAKK recently announced that it has inked an exclusive multi-year licensing deal with Chicco, the brand which specializes in kids products.

Per the agreement that came into effect from Jul 1, JAKKS Pacific owns the rights to manufacture, market, and distribute early childhood dolls, doll carriers, doll outfits and doll accessories inspired by Chicco for the U.S. and Canada.

As is widely known, JAKKS Pacific aims at becoming a kids’ consumer products company in addition to a toy company. In this regard, the company had also acquired C’est Moi, a skin care and cosmetic products brand for kids, in Oct 2016.

Additionally, the company is set to launch a kids’ fitness initiative in 2017 with a line of products that encourage active play.

Notably, JAKKS Pacific has emerged as a diversified consumer products company buoyed by a string of acquisitions over the past several years. In fact, the buyouts form a part of the company’s ventures into non-toy categories that include pet products, the Halloween business, pool products, candy, juvenile products, and other categories.

However, shares of the company have widely underperformed the Zacks categorized Toys/ Games/ Hobbies industry year to date. While the industry gained 39.8%, JAKKS Pacific’s shares lost 25.2%.

The company faces challenges in the form of a difficult retail environment, competition from alternative modes of entertainment like video games and smartphones, age compression as well as adverse forex translations.

Nevertheless, innovative partnerships could help JAKKS Pacific gain market share in a competitive industry and enter new categories through acquisitions.

Zacks Rank & Stocks to Consider

JAKKS Pacific currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader consumer discretionary sector include Nintendo Co. NTDOY, Callaway Golf Company ELY and ILG Inc. ILG. All three stocks currently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the trailing four quarters, Nintendo, Callaway Golf and ILG Inc. pulled off an average positive earnings surprise of 40.04%, 21.26% and 27.43%, respectively.

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