Funko released its preliminary results for the holiday quarter Wednesday, revealing substantial sales declines, a writedown of inventory overstock, and a surprising loss for the quarter. The news comes after a big sales jump in Q3 produced less-than-expected profits (see "Funko Reports Strong Growth, But Less Than Expected Profits").
Funko’s worldwide sales declined 8% to $214 million, down from $233 million in the year ago period, and way below the $264 million expected by analysts (analyst estimates via SeekingAlpha). The company said its sales were below expectations in "mature markets," which included the U.S., Canada, and Australia, because of a "challenging retail environment." Funko said its sales to its top customers were down, and that sales related to "certain tentpole movie releases" were soft.
One of those "top customers" was likely GameStop, which has been Funko’s #1 customer; the troubled chain reported that its holiday sales were down 27.5% (see "GameStop Holiday Sales Below Expectations").
When sales on collectibles go down, inventory quickly becomes devalued, and that clearly happened to Funko over the holidays; it took a $16.8 million writedown on overstocked inventory in the quarter.
And when sales are down and inventory declines in value, losses follow. Funko is expecting that its final numbers for the quarter will show a los of $6.0 to $6.7 million.
The tough times are apparently not over for the company, which predicted soft sales through the first half of 2020, and sales growth in the high single digits to low double digits for the year, which would be a substantial slowdown.
In further bad news for brick and mortar retailers, Funko said that it expects to find growth in direct-to-consumer channels and e-commerce.
Full results for the quarter and year will be released in March. The share price declined over 35% in after hours trading.
With Sales Declines, Loss
Posted by Milton Griepp on February 6, 2020 @ 2:13 am CT
MORE GAMES
Technical Issues Cause Ordering Difficulty
November 4, 2024
Wizards of the Coast's ordering site for Magic: The Gathering - Secret Lair x Marvel experienced technical difficulties within minutes of opening up ordering for the new drop sets.
Tabletop Token Boxes
November 4, 2024
Gamegenic unveiled new Token Silo XL models, tabletop token boxes, for release into retail.
MORE NEWS
'Dragon Shield: Dual Matte Year of the Wood Snake'
November 4, 2024
Arcane Tinmen revealed Dragon Shield: Dual Matte Year of the Wood Snake accessories, which will hit retail.
New Wave of Collectible Deck Boxes
November 4, 2024
heo Group will release new Magic: The Gathering - Foundations Squaroes , a new wave of collectible deck boxes, into retail.