JAKKS Pacific, Inc. (JAKK - Free Report) has been grappling with constricted consumer demand and indented sales like most other U.S.-based traditional toymakers. In order to overcome this situation, the company is heavily relying on partnerships and innovation across its product line.
To this end, JAKKS Pacific recently secured the global master toy license for toys based on the hit Nick Jr. series. After the successful launch of Becca’s Bunch, JAM Media gave JAKKS Pacific exclusive global rights to produce figurines, playsets and accessories, vehicles, musical instruments, plush (feature and non-feature), every day dress-up, role play, arts & crafts, board games and accessories, Halloween costumes, outdoor/indoor furniture, wagons, ride-on, play tents, ball pits, balls, and outdoor games for the show.
Notably, plush, figurines, musical instruments, vehicles and playsets are to be launched at retail stores in the United States in the fall of 2019. Broadcasting rights of the series in the United States is given to Nickelodeon.
Partnerships — Need of the Hour
The collaboration with JAM Media falls under JAKKS Pacific’s strategy of extending partnerships, and focusing on greater distribution of its iconic products to drive incremental sales. As it is, the company already collaborated with Disney (DIS - Free Report) , Skechers, Nickelodeon, Cabbage Patch Kids and Chico to manufacture toys and merchandise related to these brands. JAKKS Pacific has informed that it is likely to benefit from the success of Incredibles 2 and expects to generate solid sales from the end of 2018 to 2019.
Further, the company has licensing agreements with popular movie and television franchises like Time Warner’s Cartoon Network, Warner Bros. Consumer Products, LAFIG and Sony Pictures Consumer Products, and Universal Pictures. These, in turn, are expected to boost sales as merchandise based on movies enjoy immense popularity.
Where Does JAKKS Pacific Stand?
While we appreciate JAKK’s Pacific’s efforts to chalk out strategies and adapt to changing demand, we remain apprehensive about the fact that the company has not been able to revive sales yet.
JAKKS Pacific, like Hasbro (HAS - Free Report) and Mattel (MAT - Free Report) , is expected to keep shouldering the Toys ‘R’ Us liquidation effect in the near term. In fact, owing to the liquidation, JAKKS Pacific’s net revenues in the first and second quarter of 2018 declined a respective 1.4% and 11.5% from the year-ago levels.
However, it is yet to be seen whether the company’s efforts to turnaround through collaborations and product innovation could shore up its flagging fortunes. Meanwhile, a look at JAKKS Pacific’s price trend reveals that the stock has witnessed an unimpressive run on the bourses in the past year. Shares of the Zacks Rank #3 (Hold) company have lost 20.6% against the industry’s rally of 18% in the same time frame.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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