A strong performance in Q1 2018 means net sales are down, although the company is optimistic for the rest of the year.
Net sales for the quarter ended March 31st, 2019 were $70.8m compared to $93m reported in the same period in 2018, with 2019 sales negatively impacted by the Toys R Us liquidation and comparison to the success of Incredibles 2 last year, as well as the late Easter in 2019.
Gross margin was 20.2%, compared to 24.7% in the first quarter of 2018.
“As expected, our results for the first quarter showed the impact of the loss of Toys R Us as a significant customer, and the impact of a later Easter holiday,” said Stephen Berman, CEO. “In addition, the timing of certain key new product launches tied to major theatrical film releases has, as expected, significantly shifted our revenue to the second half of the year. Several licensed properties that drove our sales in the first half of last year saw declines, notably The Incredibles 2, Moana, and Tsum Tsum, in addition to declines in Squish Dee Lish, our own property. Still, we are pleased with the success we have seen so far with such licences as Godzilla, Harry Potter, Fancy Nancy and Aladdin, and our evergreen lines in Moose Mountain and Kids Only.
“We are looking forward to stronger sales in the second half of the year, which should benefit from a strong slate of entertainment content, notably Frozen II, as well as Toy Story 4, the 30th Anniversary of the release of Disney’s The Little Mermaid, and Disney’s Gigantosaurus animated TV series. In addition, we expect strong contributions from products based on some of our own IP, including TP Blaster: Sheet Storm, Slap Ninja, Pinata Fiesta and Power Dozer. Consistent with our strategy, we continue to see our sales through online channels increase as a percent of total sales, which we expect will help us in a shifting retail landscape.”
Adjusted EBITDA was negative $17.1m, compared to Adjusted EBITDA of negative $14.6m in Q1 2018 first quarter.