JAKKS Pacific NASDAQ: JAKK reported first-quarter 2026 results that management said were “roughly in line” with internal expectations and comparable to a strong first quarter a year earlier, even as U.S. retailers remained cautious and the company absorbed higher tariff costs.
Quarterly results: sales down, margins remained strong
Chairman and CEO Stephen Berman said global net sales totaled $170 million in the first quarter ended March 31, 2026, down 6% from the prior year. He attributed the decline primarily to lower North American results, where revenue was $78 million, down $15 million, or 16%, with decreases in both the company’s domestic and FOB business.
Berman noted that about a quarter of the North American decline was tied to a reduction in low-margin closeout sales “related to our lower level of U.S. imports last year.”
Toy and consumer product net sales fell 7%, while costumes increased during what Berman described as “one of its smaller quarters.” Despite the revenue decline, Berman highlighted gross margin of 33.4%, which he said reflected “robust product margins from new product introductions and reduced closeout sales.”
International was a bright spot. Berman said international business grew to $29 million, a 38% increase versus the prior-year quarter, with growth in both domestic business and FOB orders. Latin America “declined slightly” but grew margin dollars, according to Berman.
Tariffs and costs: higher payments, refund filings underway
CFO John Kimble said first-quarter results were relatively uneventful for a seasonally small quarter in the toy industry, but he pointed to tariffs as a meaningful difference year over year. Kimble said the company paid $1 million to $2 million in U.S. tariffs during the quarter, compared to “less than $100,000” in the year-ago period.
Kimble added that the company has filed for tariff refunds it believes may be eligible “as a result of the relevant Supreme Court decision,” but said the company does not plan to discuss the topic further until it has more confidence refunds will be received and the implications are understood.
Gross profit was $36 million, down 9% from last year, which Kimble still characterized as “a very robust number for our business.” Gross margin of 33.4% compared with 34.4% in the first quarter of 2025, which Kimble described as “exuberant.”
Profitability, cash, and dividend details
Management said SG&A expenses fell 4% in the quarter, but the reduction was not enough to offset the decline in margin dollars. Berman said adjusted EBITDA was a loss of $371,000, compared to an adjusted EBITDA gain of $354,000 in the prior-year quarter.
Kimble said trailing 12-month adjusted EBITDA decreased 2% to $34.6 million. On an adjusted basis, he reported a quarterly loss of $0.17 per share and said diluted share count was roughly 11.4 million shares.
On the balance sheet, Kimble said JAKKS ended the quarter with $64 million in cash, up from $59 million last year, while inventory was “flattish” at $53 million, essentially unchanged year over year.
Kimble also said the board approved a $0.25 per share payment for the second quarter, with a May 29 record date and a June 29 payable date.
Retail caution, FOB strength, and product drivers
Berman said the company continues to see “a degree of caution” from U.S. accounts, which he described as “somewhat tentative about the year” as they evaluate consumer health, cost pressures, and pricing resilience. He added the industry is watching higher oil prices due to implications for resins and transportation costs.
At the same time, Berman emphasized the strength of the company’s FOB model. He said demand for FOB “remains extremely strong,” and that over 70% of the company’s first-quarter North American business shipped FOB.
Looking to key brand and product drivers, Berman said the company was “thrilled” with the theatrical response to The Super Mario Galaxy Movie. He said retailers were prepared this time and provided “significant out-of-aisle and promotional space starting early March,” and added the film created excitement in Europe, with Smyths cited as a major supporter. Berman also said the company expects continued momentum around the Mario product line with a streaming announcement and launch later in the year.
Other initiatives mentioned by Berman included the expansion of the Sonic x DC crossover product to all accounts this spring after initially being an exclusive. He said a new comic book in the series is “dropping this quarter,” and noted Sega is building excitement around Sonic’s 35th anniversary, with JAKKS working as its “anchor toy partner worldwide.”
Berman also cited strong sell-throughs in evergreen lines including Disney Princess, Style Collection, Eevee, and Frozen, and said the company refreshed its 6-inch doll line this spring and is seeing it sell “extremely well.” He added the company has price-point coverage “at both the below $10 and below $20 retail prices.”
In action sports, Berman said the company added the Almost, Darkstar, and Dusters brands to its skateboard portfolio. Within its Disguise costumes business, Berman said the company launched K-Pop Demon Hunters and is seeing additional costume demand tied to the Super Mario film. He also pointed to heightened energy around Pokémon’s 30th anniversary and said European costumes business continues to grow, including shipments to new U.K. customers as JAKKS transitions into vendor relationships previously served by in-house sourcing teams.
Anime platform: a multi-year investment with 2027 launch target
A major strategic focus discussed on the call was JAKKS’ recently announced initiative in anime, manga, and digital creators. Berman described it as “one of our company’s most ambitious, strategically significant initiatives,” developed over more than two years and intended to support a large-scale cultural platform spanning product and distribution channels.
In response to analyst questions, Berman said the company has been working with Japanese IP owners whose oversight is “very stringent and very strict,” citing discussions with companies including Aniplex (Demon Slayer), VIZ Media (Naruto), and Kodansha (Attack on Titan), among others. He said the company hired a “very young, passionate group” across anime, manga, and digital marketing, and planned products ranging from collectibles to tech accessories.
The platform’s initial launch is expected in 2027, with Berman saying some product will ship in 2026. He also outlined distribution ambitions that include specialty and independent retail and venue-based merchandise sales, noting that authentic merchandise is often limited at events. On margins, Berman said pricing would be “slightly higher” and “the margin in our area for JAKKS Pacific will be slightly higher,” reflecting the kid/adult focus.
Berman said international execution in anime will be market-specific, pointing to France as a particularly strong anime market in EMEA and Mexico as significant in Latin America, and emphasized the need to tailor IP and product selection by territory.
On capital allocation, Berman said the company is investing more than normal in tooling, marketing, and overhead tied to the anime initiative and other new programs, while also evaluating acquisition opportunities. “We are seeing opportunities on the acquisition front,” he said, adding the company wants to deploy cash on an accretive basis.
About JAKKS Pacific NASDAQ: JAKK
JAKKS Pacific, Inc NASDAQ: JAKK is a Los Angeles–based company that designs, develops and markets a broad range of toys and consumer products. Since its founding in 1995 by industry veteran Jack Friedman, the company has built a diversified portfolio spanning three primary segments: Toys, Consumer Electronics & Seasonal, and Kids Furniture & Accessories. JAKKS Pacific specializes in both licensed and proprietary brands, collaborating with major entertainment and sports licensors to bring popular characters and franchises to market.
The company's Toys segment includes action figures, dolls, role-play items, collectible toys and outdoor activity products.
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