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JAKKS Pacific, Inc.

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Shares of JAKKS Pacific have declined sharply in the past year, underperforming the industry. The company’s sluggish performance is likely to continue, given a challenging industry scenario for traditional toymakers, which was reflected in the first-quarter 2018 results. Adjusted loss of 88 cents per share was wider than the Zacks Consensus Estimate of a loss of 60 cents. Even though net sales surpassed the consensus mark, it fell 1.4% year over year. Decline in revenues was caused by liquidation of Toys “R” Us. Tighter retail inventory management also added to the woes. Further, the company’s earnings have been under pressure, incurring losses in 10 of the 13 trailing quarters. Rising costs, age compression and shift in consumer demand to alternative modes of entertainment remain threats to the top line. Nevertheless, efforts to enter new categories, and create a strong portfolio of new and existing licenses bode well.

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