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    JAKK
    Earnings call· Jun 2026(Q2 FY26)

    JAKKS PACIFIC INC JAKK

    Jul 23, 2026 Source

    Executive summary

    JAKKS Pacific Q2 FY26 — Strong Sales Growth and Improved Profitability

    JAKKS Pacific delivered strong Q2 FY26 results, driven by robust sales growth in North America and International markets, particularly benefiting from movie-licensed products. The company significantly improved profitability metrics, including adjusted EBITDA and EPS, partly aided by tariff refunds. Management is actively addressing structural headwinds in the outdoor seasonal business while expanding global reach and diversifying product offerings, including new initiatives in anime and private label.

    Highlights

    5

    • Net sales increased 17% year-over-year to $139.2 million in Q2.

    • Year-to-date sales reached $245.9 million, up 6% year-over-year, marking the best first half since 2023.

    • Adjusted EBITDA for Q2 was $5.4 million, a significant improvement from $2.3 million in Q2 last year.

    • Adjusted EPS for Q2 was $0.25, compared to $0.03 in Q2 last year.

    • Cash and investments increased to $60.6 million at quarter-end from $43.1 million last year, partly due to tariff refunds.

    Concerns

    2

    • Outdoor seasonal business sales were down 12% in Q2 to $11.1 million and down 17% year-to-date, identified as a structural headwind due to retailers reallocating in-store space.

    • Gross margins slightly decreased to 32.3% in Q2 from 32.8% in the prior year.

    Guidance & targets

    1
    CategoryTargetConfidence
    Anime-related revenue contribution
    None
    medium materiality
    High

    Segment performance

    7
    SegmentRevenueYoYQoQMargin
    North America
    North America led the improved results, growing 20% year-over-year in Q2 and 3% for the first half.
    		—20%——
    International
    Our international business reflected smaller year-over-year growth of 3%, led by Europe, but is up 20% for the first half of the year. Overall, this is the highest level of international first half shipping in JAKKS history in over 10 years at $53 million.
    		$53M3%——
    Toys/Consumer Products
    Keeping the focus on the first half, our Toys/Consumer Products business was up 5%. Those results were driven by the Action Play & Collectibles division, which was up as we supported the extremely successful second Super Mario Bros. film release in April, led by an array of 5-inch figures developed specifically for the film.
    		—5%——
    Action Play & Collectibles
    Those results were driven by the Action Play & Collectibles division, which was up as we supported the extremely successful second Super Mario Bros. film release in April, led by an array of 5-inch figures developed specifically for the film.
    		—up——
    Dolls, Role Play/Dress-Up
    Our Dolls, Role Play/Dress-Up business was up 12% in Q2 despite a lack of new entertainment support compared to the prior year.
    		—12%——
    Disguise (Costumes)
    Our Disguise business also performed well, up 8% in the quarter and 9% in the first half.
    		—8%——
    Outdoor Seasonal
    Our outdoor seasonal business... remained a slight drag on the results this quarter... down 12% and down 17% year-to-date to $11.1 million in sales.
    		$11.1Mdown 12%——

    Operational metrics

    8
    Gross margin dollars
    $80Mup 3% YoY
    H1 FY26

    I'm focused on seeing gross margin dollars increase 3% in the first half to a little over $80 million.

    Operating loss
    $142,000improved from $2.8M loss YoY
    Q2 FY26

    Tight management of sales, marketing and overhead costs led to a slight operating loss of $142,000 in the quarter compared to a $2.8 million loss in Q2 of last year.

    Operating loss
    $5.7Mimproved from $6.5M loss YoY
    H1 FY26

    That led to a slight operating loss in the quarter and a $5.7 million operating loss in the first half improved over the $6.5 million loss last year in the same time period.

    Tariff refunds recognized
    $6.8M
    Q2 FY26

    The remainder of funds received, we have recognized in the P&L this quarter as nonoperating other income of $6.8 million.

    Inventory balance
    $58.3Mdown from $71.8M YoY; up from $52.9M QoQ
    Q2 FY26

    Our inventory level at the end of the quarter was $58.3 million, down from $71.8 million at this time last year and up a bit from $52.9 million last quarter.

    Quarterly cash dividend
    $0.25sixth consecutive quarterly
    Q2 FY26

    Finally, the Board has approved our sixth consecutive quarterly cash dividend of $0.25 per share.

    FOB shipments percentage
    over 75%highest level this decade
    H1 FY26

    Our FOB-centric business model is alive and well. Our first half shipments were over 75% FOB, reaching as high of a level as we've seen this decade.

    Retail point-of-sale growth
    positiveaccelerating to double-digit levels in Q2
    H1 FY26, Q2 FY26

    Retail toy and consumer products POS at the top 2 U.S. accounts was positive in the first half, accelerating to double-digit levels in Q2.

    Industry KPIs

    8
    MetricValueDetails
    EPS$0.25USD per share
    Revenue$139.2MUSD
    Inventory$58.3MUSD
    Gross margin32.3%%
    Adjusted EBITDA ebita$5.4MUSD
    Operating income EBIT-$0.142MUSD
    Cash investments balance$60.6MUSD
    Tariff impact mitigation$6.8MUSD

    Product announcements

    13
    ProductTypeDetails
    Super Mario Bros. film productsexpansion
    Frozen product lineexpansion
    Disney Darlings lineexpansion
    Grow and Style Rapunzel Doll and Interactive Dance with Me Belllaunch
    Disney ILY new rangeexpansion
    Giant Metal Soniclaunch
    DC Sonic crossover series productslaunch
    Super Mario Wonder Game themed itemsexpansion
    DC Comics collector doll linelaunch
    Disguise costumes for new entertainment releaseslaunch
    Sonic the Hedgehog theatrical release productsroadmap
    Disney Frozen theatrical release productsroadmap
    Anime, Manga, WEBTOON digital entertainment initiativeslaunch

    Deals & partnerships

    2
    Major retailersPrivate label initiatives

    Diversified company in a very healthy platform going forward.

    DistributorsWorking with more distributors to reach additional accounts in more fragmented international markets.

    Part of the strategy to elevate focus and performance outside of the U.S., leveraging evergreen brands and categories with global appeal.

    Risks & headwinds

    3
    Structural headwind in outdoor seasonal businessongoing

    down 12% in Q2 to $11.1 million in sales; down 17% year-to-date

    Mitigation: Reengineering packaging and product design to shrink box sizes and improve delivery economics; partnering with retailers to defend and recapture shelf space and lost sales.

    Retailers reallocating in-store space away from large box itemsongoing

    contributing to outdoor seasonal business decline

    Mitigation: Partnering with retailers to defend and recapture shelf space.

    Bulky formats poorly suited to low-cost home delivery modelongoing

    contributing to outdoor seasonal business decline

    Mitigation: Reengineering packaging and product design to shrink box sizes and improve delivery economics.

    What to watch in Q3 FY26

    5

    Outdoor Seasonal Business Performance

    Next quarter (Q3 FY26)
    CurrentDown 12% in Q2 to $11.1M sales, down 17% YTD.
    TargetImprovement in sales trend or signs of effectiveness from reengineering and shelf space initiatives.

    Why it matters

    This is identified as a structural headwind, and management's mitigation efforts are crucial for long-term growth.

    Our outdoor seasonal business... remained a slight drag on the results this quarter... down 12% and down 17% year-to-date to $11.1 million in sales. We are not waiting this out. We are managing this business with a multiyear lens and a clear plan on 2 levers: partnering with retailers to defend and recapture shelf space and lost sales and reengineering packaging and product design to shrink box sizes and improve delivery economics.

    Q&A highlights

    6

    How has the domestic market changed after the tariff shock, and what opportunities is JAKKS leveraging?

    Management adapted by reducing costs to bring price points down, especially for sub-$30 retail items, which are seeing strong POS. They diversified distribution to value trade (TJ Maxx, Ross) and dollar stores, alongside major customers like Target, Walmart, and Amazon.

    “we have mandated and have achieved what we needed to going into this year, which is reducing costs in various products to achieve bringing back the price points to the correct price points that we see more volume in.”

    asked by Eric Beder · answered by Stephen Berman

    2 min read6 chapters

    Detailed Narrative

    01

    Q2 Performance Overview

    JAKKS Pacific reported Q2 FY26 net sales of $139.2 million, a 17% increase year-over-year, and year-to-date sales of $245.9 million, up 6%, marking the best first half since 2023. North America sales grew 20% in Q2 and 3% for the first half, while international sales grew 3% in Q2 and 20% for the first half, reaching a record $53 million.

    02

    Product Line Highlights

    The Toys/Consumer Products business was up 5% in the first half, driven by the Action Play & Collectibles division, which benefited from the second Super Mario Bros. film release. The Dolls, Role Play/Dress-Up business saw a 12% increase in Q2, with strong performance from the Frozen product line and refreshed Princess doll lines. Disguise costumes also performed well, up 8% in Q2 and 9% in the first half, supported by popular film licenses.

    03

    Addressing Structural Headwinds

    The outdoor seasonal business experienced a 12% decline in Q2 sales to $11.1 million and a 17% year-to-date decrease, identified as a structural headwind due to retailers reallocating in-store space and challenges with bulky formats in low-cost home delivery. Management is implementing a multi-year plan to recapture shelf space and reengineer packaging for improved delivery economics.

    04

    Financial Efficiency and Tariff Refunds

    Gross margins were 32.3% in Q2, slightly down from 32.8% last year. However, tight management of sales, marketing, and overhead costs led to a significant improvement in operating loss to $142,000 from $2.8 million in Q2 last year. The company recognized $6.8 million in nonoperating other income from tariff refunds, which contributed to adjusted EPS of $0.25 for Q2 and $0.09 for the first half.

    05

    Strategic Growth Initiatives

    JAKKS Pacific is increasing its focus on international markets, expanding distribution channels, and curating new offerings. The company has added senior sales professionals and opened an office in South America for long-term growth. New product introductions for the second half include Giant Metal Sonic, new DC Sonic crossover products, and expanded Disney Darlings and Princess lines.

    06

    Future Outlook and Diversification

    The company is on track for a strong 2026 and is building for growth in 2027 and beyond, with major theatrical releases like Sonic the Hedgehog and Disney Frozen 3. New initiatives include anime, Manga, VTubers, and digital entertainers, targeting both grassroots and wide distribution channels, with no revenue expected from these efforts in FY26. The company is also exploring M&A opportunities given its strong balance sheet.

    AI-generated summary of the company’s earnings call. Not investment advice.