On the retail front, the company said in the conference call (transcript via Seeking Alpha) that less than 4% of its sales had been through Toys 'R' Us, and those sales had been picked up by other retailers. The company had previously revealed only a $1.8 million expense related to the TRU shutdown (see "Funko Sales Up 39% in Q1").
A new program at Walmart is launching, with 4 to 20 feet of display space in the DVD and entertainment sections across the chain, depending on store size. The move from the toy department occurred during Q3, causing a dip in sales through the chain for the period, with improved sales expected during the holiday season.
Specialty retailers are where Funko’s sales are growing, up more than 30% year-over-year in the first nine months of the year. As we’ve noted in the past, Funko products are nearly everywhere, and that trend is continuing, with a store-within-a-store test in Foot Locker stores performing well, the company said. The number of Foot Locker stores in the program will be up to 60 this month.
On the property side, Funko’s top ten properties for the quarter were:
- Harry Potter
- Nightmare Before Christmas
- Marvel Classic
- Overwatch
- Disney Classic
- Deadpool
- The Fantastic Beasts
- The Crimes of Grindelwald
- Star Wars Classic
- Five Nights of Freddy
- Stranger Things
The number of active properties for the company continues to grow rapidly, up 38% from 400 to 553 in the quarter. Comparing those numbers to sales growth explains why net sales per property were down 10% in the quarter.
Profits were down due to a decline in gross margin, which the company attributed primarily to more aggressive pricing in Europe, and increased expenses. The company made around $8.1 million (before deduction for income attributable to non-controlling interests) on $$177 million in sales for the quarter. Still, both sales were profits were better than anticipated, so a good quarter overall for the Funko.
