JAKKS Pacific NASDAQ: JAKK management said tariff-related disruption weighed heavily on 2025 results, even as the company emphasized margin discipline, cost control and continued investment in future product initiatives during its fourth-quarter and full-year earnings call for the period ended Dec. 31, 2025.
Chairman and CEO Stephen Berman described 2025 as “a defining year” marked by “visible pressure on near-term financial performance” from tariff policy. He said the company avoided pursuing “short-term top-line growth at the expense of bottom-line margin integrity,” while deepening relationships with factories, licensors and retail partners. Berman also said the company completed its first full year as a cash dividend payer, returning $1 per share while maintaining a debt-free balance sheet.
Fourth-quarter sales flat in toys, down companywide on costumes
Berman said toy and consumer product net sales were “roughly flat” in the fourth quarter at $118 million, down 0.2% year-over-year. Costumes declined during what he characterized as a smaller seasonal quarter, bringing total company fourth-quarter sales down 2.8% from the prior year to $127.1 million (roughly flat with the company’s fourth quarter of 2023).
Regionally, Berman said total U.S. fourth-quarter business declined 7.8% to $86.2 million, which the company attributed to the higher tariff burden. He said higher retail prices led to slower sell-through in the second half and “lower fourth quarter replenishment,” though fourth-quarter FOB sales to the U.S. were positive year-over-year and helped offset some weakness. Outside the U.S., fourth-quarter sales rose 9.9% to $41 million, with Europe roughly flat and Latin America up significantly after a softer third quarter.
Tariffs cited as key driver of 2025 sales declines
On a full-year basis, Berman said the toy and consumer product business fell 19%, with evergreen action, play dolls and role play particularly affected by tariffs’ impact on customer ordering patterns and higher consumer prices. He added that all three toy and consumer product divisions declined, ranging from 9% to 23% for the year. The costume business declined 10% for the full year, with a slight increase internationally offsetting weaker U.S. results.
Chief Financial Officer John Kimble said the fourth quarter reflected some stabilization after “tariff shocks of Q2 and Q3.” He noted that fourth-quarter results also benefited from FOB shipments tied to the Super Mario Galaxy film, which helped the company’s action play and collectibles business post 19% year-over-year growth, supported by both North America and international markets.
Kimble also quantified tariff impacts discussed during the call:
- JAKKS paid roughly $12 million in U.S. tariffs in 2025, which Kimble said the company believes it recovered through higher pricing.
- Kimble estimated the company’s U.S. FOB customers paid nearly $50 million in tariffs on JAKKS and Disguise product in 2025—money he said “would have otherwise been allocated towards more actual product” and, in turn, higher JAKKS revenue.
Margins improve despite lower volume; adjusted results still pressured
Berman said the company finished 2025 with a gross margin of 32.4%, the highest full-year level in more than 15 years. He said gross margin dollars increased in the fourth quarter year-over-year due to “better costing from our factories and improved inventory management.” Kimble added that full-year gross margin improved versus 2024 (30.8%) and was more consistent with 2023 (31.4%), attributing product cost control to collaboration with the company’s factory network and reduced obsolescence expense. He also said royalty expenses increased due to minimum unearned royalty payments and product mix.
Kimble said selling expense ended the year down 8% while G&A was roughly flat, reflecting tighter SG&A discipline without, in management’s view, impairing product development or new initiatives for 2026 and 2027. Berman said full-year SG&A expenses declined 1%.
In profitability metrics discussed on the call:
- Berman said fourth-quarter adjusted EBITDA loss improved to $3.8 million from a $10.2 million loss in the same quarter last year.
- Kimble said full-year operating margin fell to 2.5% from 5.7% and adjusted EBITDA margin declined to 6.2% from 8.6%.
- Kimble reported an adjusted quarterly loss of $0.18 per share, improved from a $0.67 loss in Q4 2024, and full-year adjusted EPS of $1.62, down from $3.79 in 2024. Diluted share count was about 11.5 million shares.
Kimble also noted that 2025 was the first year in a long time that interest income exceeded interest expense, contrasting it with 2020 when the company paid $21.6 million of interest expense.
Balance sheet, inventory, and dividends
Kimble said JAKKS ended 2025 with $54 million in cash, down from $70 million a year earlier, which he attributed to the decline in sales. Inventory was “a bit less than $60 million,” up from $53 million, driven by expanded distribution in Europe and Mexico. He said U.S.-held inventory declined 18% year-over-year to the lowest year-end level in more than 10 years.
On retail inventory, Berman said inventory at two major U.S. retailers was down 21% year-over-year at one and down about 4% at another, calling inventory levels “very tight.” He said the company avoided chasing sales volumes that could leave excess inventory after the holiday season.
Kimble said the company generated more than $8 million of cash flow from operations in 2025 and paid $11.2 million in common dividends. He said the board approved a first-quarter dividend of $0.25 per share, with a record date of Feb. 27 and a payable date of March 30.
Product and licensing priorities for 2026 and beyond
Looking ahead, Berman said a key focus for early 2026 is the theatrical release of the Super Mario Galaxy Movie from Illumination. He said the associated product launch would be available for purchase in late February, ahead of the film’s April 1 release, and would include five-inch figures, new minifigures, play sets and plush.
Berman also highlighted momentum from a Sonic DC crossover launch in the fourth quarter with exclusive retailer introductions in the U.S. and Europe, with broader distribution planned in 2026 and new items such as the “DC Sonic Batmobile.” He said there are additional plans around Sonic in 2026 that the company was not yet ready to disclose.
In Disney dolls, Berman cited “solid momentum” for Disney Darlings and continued strength in Style Collection and Disney’s Ily. He said the Disney Darlings line sold through well in a fall soft launch, driving expanded U.S. listings and increased international interest coming out of the Nuremberg Toy Fair. He also said the company plans to support the live-action theatrical release of Moana in early July with products including Moana’s Necklace, Maui’s Fishhook, Heihei and large dolls, and referenced additional Disney doll developments later in the year.
In action sports, Berman said Element gained momentum in the second half of 2025 with expanded distribution and deeper retail partnerships, including with Walmart, Amazon and Academy Sports and Outdoors. He added that the company is encouraged by rising retail confidence in action sports as the industry moves toward the 2028 Summer Olympics.
For Disguise costumes, Berman said the company expects to support multiple upcoming theatrical releases including Toy Story 5 (late June), Moana, Descendants: Wicked Wonderland, as well as second-half releases tied to Minions and Paw Patrol. He also noted Halloween falls on a Saturday in 2026, which he suggested could drive incremental activity beyond traditional trick-or-treating.
Management said the company is positioning for new launches expected to have greater impact in 2027, while viewing 2026 as a “low-to-mid-single-digit top-line growth year” with continued focus on margin expansion.
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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