Q3 2024 JAKKS Pacific Inc Earnings Call
[inaudible]
[inaudible]
Good day and thank you for standing by. Welcome to the Q3 2024 Jack Pacific earnings conference call.
At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session.
2. Ask a question during the session. You will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. 2. With dry your question, please press star 11 again.
Please be advised that today's conference is being recorded.
Speaker Change: I would now like to hand the conference over to your speaker today, Stephen Berman, Chairman and CEO.
The New York Times, the New York Times, and the New York Times.
Good afternoon and thank you for joining us today.
Stephen Berman: It's exciting time with the year here, as Q3 is always the highest sales quarter, and by extension generates a lot of activity.
The end of the year is in sight with less than 60 shipy days remaining and our goals for the full year are starting to feel like they're more within reach.
Our teams around the world were collaborating across offices extensively last quarter to ensure we were fulfilling orders and not taking note for any answer when obstacles appeared whether driven by East Coast port issues or otherwise.
We always try to deliver as much of our second half volume in Q3 to mitigate full-year risk and to ensure customers and shelves are set for the holidays.
and Q4, we pivot a lot of our attention to execution of pre-planned retail programs and consumer marketing to generate strong self-through.
We are executing against the game plan this year with some great programs in place across wide range of accounts and all of our major markets.
As highlighted in our press release, all three of our toy consumer product divisions delivered year-to-year sales increases in third quarter. That includes our outdoor seasonal business, which adamantly has been challenged in recent years.
and proved listening to some of our core businesses and the timing of the shipments are leading to the improvements.
Stephen Berman: It's still early days but it's great to see some of the positive trans emerging there.
Are though we are selective about what we discussed during any given quarter, as a reminder, portfolio management is essential part of our operation.
We are actively managing over 30 different businesses with the Toyota consumer products alone in this year.
Stephen Berman: Whether it's a property driven businesses like various IPs from the Walt Disney Company, IP from Nintendo, Daniel Tiger, Neighborhood or Black and Decker or many others, or category driven one like playtence or ride-ons, each product line has its own dynamics.
The Rear differences in customer base, retail placement, competitive set, manufacturing issues, costing and pricing, product innovation and brand relevance. I can go on and on and every country is a distinct market in regards to most of those points.
Those drivers are then independent of whatever broader trends might be impacting our customers and consumers, which tend to get most of the attention and discussion. But the success of any of these businesses is really driven, bottoms up starting with the unique product line, and the consumer and customer value proposition.
The portfolio approach is essential to maintaining and growing a healthy business over time, especially given that our end consumers will naturally age out of our offerings in most instances.
This reality forces us to constantly change ourselves when it comes to product freshness and innovation while maintaining sensitivity to retail margins requirements and consumer price considerations.
Our Dolls roleplay dress-up business was up 6% in the quarter and is up 2% year-to-date.
And our action play and collectible business was up 5% in the quarter, but down 9% year to date as the timing of the Sonic 3 film in December this year doesn't compare well with the Super Amar brothers movie film which was released in April 2023.
Independent of Other Aspects of That Business.
But great quarters for both divisions regardless, really exciting things happen in each one, but now looking forward.
We are also continuing to fight for business internationally and keep up with customer demand.
Stephen Berman: Latin America continues to be our biggest accessory. We shift 22.6 million in the quarter up 48% compared to the prior year and currently up 23% year to date in the region.
Our European region continues to open up new accounts and build out its infrastructure. But if they battle that's taking place, customer by customer and market by market as we knew it would be. As a region, it benefited significantly in the strength of Super Mario Brothers movie last year.
Nundilest, down 3.8% in a big quarter is a good sign and improvement over Q2.
Asian Pacific is relatively small for us and is also down 3.4% in the quarter. Canada is down over 4 million in the quarter due to the combination of timing and some challenging trade dynamics there.
Turning to what we see at retail, I say the consumer is constantly showing up and acting when novelty and tuna appears on the shelf.
But they're not feeling the cart with everything they see. A lot of our aggregate year-over-year POS trends are dominated by retailers actively destocking last year. And by extension pushing through the channel content lead properties from recent years.
But several of our new fall introductions have received great consumer reactions and have left retailers Grammied to pull products from their warehouses and back rooms into the front of the store.
Well, with our strong selling this quarter, the meaningful cash register ring is starting to happen now and particularly in November December as our median promotional campaigns kick in.
Obviously, Halloween shopping is continuing as we speak.
Stephen Berman: As we have communicated all year, retail is still feeling out where the consumer is, and we've known we were looking at a down shipping year.
This is a holiday that families each show up extremely late, even more so than Christmas tense. So despite today's date, it's hard for us to say with any definitive as to how the year will end up.
Early reads on POS from syndicated data suggests that self-ru is soft across the industry.
The good news is that we are doing better than most everyone else and potentially pick it up a bit more of the market share in the process. But again, that's really just an early read from earlier this month.
Stephen Berman: Our 2025 lineup is largely developed and the team will soon be pivoting to close to the books at 2024 and refokes towards what will hopefully be a stronger 2025.
It is worth noting that outside the US, our costume business was up in the corner, which is a 7% increase versus prior year.
The UK in particular has seen some costume companies reorganize and remains a lot of disruption happening there.
But our company white efforts in Europe are designed to support our touring consumer products and costume businesses in more than an integrated manner than how we go to market in the US. So we remain both hopeful and confident we continue to build the quality of volume there.
Moving over to the balance sheet, we are mainly extremely disciplined with 63.5 million in net inventory at the end of the quarter, inclusive of in-transit product, compared to 68.8 million at this time last year.
We are lower despite our continuing to build out an EU.
Hub and spoke warehouse system to be more responsive to customers with faster replenishment times. We're also taking advantage of our financial strength and resilience to scrutinize our training terms to maximize margins and ultimately cash.
This approach is prompting our receivables to grow meaningfully for since the prior year, as we had anticipated.
Our approach is working and our AR has been turning back into cast, such that we had no drawdown on our credit line by the end of the quarter.
By Extension, I'm extremely happy to reiterate that we remain debt free as a company.
In a world of uncertainties and volatility around interest rates, it's just great to be operating from this position of strength As we prepare for the next year, an evaluate new business opportunities for 2026 and beyond.
Another note worthy element of our business is the extensive number of exclusive products we bring to a broader array of retailers globally.
We have also had a heavy focus over the past few years to secure additional space at retail. Beyond traditional in-eil planograms, you can find us with out-eil placement, stand-alone displays, pallet programs, and caps, and at the check lane.
This additional real estate at various retailers globally opens new, consistent selling opportunities both in season and year round. As our price value and strong consumer proposition drive solid results for the customers by extension of our license doors.
We know that the question of capital allocation is on many investors' minds and it's odd ours too. We do not have any new news on that front to an out today. I do feel we are getting closer to the point that we can be more specific about our plans in this area.
As a company, we are in a much, much stronger place than we were during the terminal of 2018 and 19.
We are still mindful, however, that our success is not a reason to squander all that hard work. We are soliciting a wide range of opinions and taking very thoughtful look at all of our options and possibilities for the years ahead and by extension what our capital goals and needs should be.
I will now pass it over to John for some further comments after which I will come back to discuss Q4 and a bit more. John.
and hello everyone. It's always a bit more pleasant to talk about the business after Q3. Another $300 plus million sales quarter behind us, slightly more than last year, a super-outcome.
talked a lot about sales, but I'll later in one more observation.
Earlier this year, we added to our earnings presentation deck and attempt to more clearly break out the core, evergreen business that we view as foundational to the company.
Stephen Berman: This analysis looks to isolate the more volatile content driven figure and doll product clients. We understand that those who don't live in our aisles at retail every day, the dynamics of the 30 plus businesses in our portfolio are near impossible to visualize and keep track of.
and has also pointed out there are limits to what we can share for both confidentiality and competitive reasons.
But in any case, I wanted to highlight that among the positive attributes of our Q3 results you can see.
I think it's page 18.
Our content business listing nicely year over year, given the strength of that portion of the portfolio as we enter the back after the year. But more importantly, the core, every green business is collectively, that put up solid numbers this year, inclusive of Q3.
That is not to suggest we intend to fall into the trap of scrutinizing the quarterly box score when we are managing to a full-year result. This view of our business is more than analysis of the outcome of our collective efforts, more than an organizational design or a specific destination we're trying to navigate towards.
But overall we continue to feel it's helpful so we hope externally you find it at least somewhat insightful.
Moving on down the P&L, Gross margins held up well in the quarter. Costa product was a bit higher than prior year as we've been seeing and anticipating. Similarly, royalty expenses have been a little bit lower in aggregate to help compensate.
Stephen Berman: We're very happy with a 33-plus percent gross margin in any quarter, but in particular during our largest quarter. Gross profit dollar growth of 2% in the corner, $1.8 million in total, is modest, but much better than the unfavorable $14 million gross profit swing we saw in the first half of the year.
We continue to feel that we are running a business that should deliver a minimum of 30% gross margins on a full year basis.
That projection assumes that not everything executes perfectly, but that the number of things that don't work as planned remain a somewhat tolerable quantity and don't miss the intended Mark II dramatically.
Selling expense in the quarter was $7.6 million, down from $10.7 million in the prior year.
There are at least a couple of different things happening in this area. We're laughing some expensive quarters in the selling, warehousing and outbound freight areas last year, which in total generated about $1.5 million in one time favorability this quarter.
Stephen Berman: We also have a bit of a timing save as we have been pushing more of our plan media spend into Q4 than what we have done historically.
I would say here today that's about $2 million that will find its way into Q4 compared to last year. So a lot of moving pieces here, but as we get closer to the end of the year, the cumulative variance starts to smooth out a bit.
Our DNA spending similarly was decent in the quarter at $33.1 million, down 2% from $33.8 million. And meaningfully improved from the garbagey plus 16% increase we posted in the first half of the year.
We are starting to laugh some staffing related costing creases that took place in 2023. We also continue to work down some short-term spending which I've talked about before, related to Sarbanzoxley, cybersecurity, and other process related deferred maintenance type areas we've been catching up on.
And it's also worth noting that the teams have taken to heart the message that we were very clear about it the start of the year, about the revenue comparison being tough this year. So we needed some new thinking and ideas about where we could reallocate spend to more beneficial areas.
As a result, we saw some benefits here and there starting to dribble through it in the quarter. This is a persistent failing water exercise as broadly our fixed cost and to creep up consistently such that without scale leverage is very challenging to maintain or stay in margins.
In reviewing the URVDTELL, it's worth noting that the credit worthyness of some retailers remains a concern for us. I would estimate that we're up to about 1% of URVDT sailed decline, attributable to a deteriorating credit situation in some of our customers.
This reflects the combination of customers with file for bankruptcy, as well as those we consider very high risk.
We are frequently in discussions internally for both our toy C.P. and costume businesses around this issue.
Our Crystal Ball is in perfect. We have one noteworthy account in North America who remains significantly passed due, but has yet to file.
But overall, we think we've done a good job to date turning off shipping at the right time.
Speaker Change: We do suspect there is more bad news to come on this front in the world of retail, unfortunately.
On a lighter note, let's talk about interest expense. A Stephen pointed out as we move through our seasonal curves, we have paid down our short-term borrowings as a quarter-close and we remain undrawn as of today. Our year-to-date interest expense is $938,000, a reduction of $4.8 million versus the first nine months of 2023.
For fans of EPS, that's over 40 cents per share and annual pick-up with 1 quarter left to go. And for fans of cash, it's clearly a meaningful year for your pick-up and pre-tax mid-income, even if it doesn't appear in our adjusted E-bidda metric.
The Justice EPS for the Quarter was $4.79 and $4.50 for the first nine months.
Those numbers are up from $4.75 and down from $5.66 respectively from 2023.
We're trailing 12-month adjusted EBITDA is 58.5 million dollars reflecting an 8.5% EBITDA margin.
Speaker Change: and now back to Stephen for some additional remarks.
Stephen Berman: Thank you John. We talked a last quarter about a lot of our new product initiatives for this fall, but I wanted to highlight a few more areas as we look to finish up the year.
A little over two years ago we highlighted new terminal analysis where we assess the role of low and opening price point retails to our overall business.
We recently revisited that analysis over happy to see consistent results.
Stephen Berman: It continues to be the case that over half of our total company towing consumer products sales volume, a driven by retail price levels of $30 or less.
When you raise that threshold to $50, you're getting to close to 90% of our sales volume.
Rear-Main committed to running a business that is built around the idea of accessible price points and by extension addressing the widest possible consumer market both in the US and internationally.
This philosophy, by extension, helps to minimize our risk, inventory, and any one of our product lines as well as reduce the amount of cash we are tying up in working capital.
and although price points does not directly relate to size, you can also consider the supply chain efficiencies associated with smaller Q products, whether you're considering an ocean freight, warehousing, or when you appropriate directed consumer shipping.
Stephen Berman: and walk in our showroom. You will see that commitment to opening price points across nearly every single one of our businesses.
Stephen Berman: and I should also highlight it's always a key criteria that was a contemplate entering new categories of businesses either organically or via acquisition.
Stephen Berman: With all that said, however, we do selectively and thoughtfully bring to the trade higher price rate propositions from time to time.
We understand the excitement and energy around gift giving delivering the big box.
Stephen Berman: and we don't want to stay shut out of that portion of the market.
Our Disney Princess Style Collection Fresh Prep Gourmet Kitchen is a great item and is a consistent presence in our Lyonsense being introduced last year.
Our Black and Decker tabletop workbench is a great evergreen item available at most major alert counts.
Our climbing jungle gym comes in Fisher-Frice, Paw Patrol, and many mouse versions. It encourages children to engage in physical activity and hands in their motorskills and overall health.
Stephen Berman: The safe and easy assemble, play structure allows children ages 2 to 6 to express their activity and their capability and imagination.
Complete with a attachable slide, squeaking stairs, a tox game panel, the durable climbing gym is one of the most popular sought-after preschool toys that's holiday season.
This fall, everyone is really excited about our latest offering in this price range.
Building on the tremendous success of our target shopping cart and target cash register. Late last quarter, target introduced the new target toy check lane.
This toy delivers on all the pretent shopping needs.
It comes with a target pretend shopping bag, various target essentials, groceries and pre-tend money.
It features a hand crank conveyor belt, beeping scanner, baguette area, credit card swipe machine and working cash register with microphone, cash drawer and working buttons.
Stephen Berman: The team really did a fabulous job with this item and it looks amazing and plays amazing.
I personally enjoyed showing nearly everyone who has come through our offices over the past over a month, what a great example it is of our bringing something new and fresh to retail. I also being very fast to market, given how quickly we went from concept to customer approval to shipping.
Another area we didn't cover on our last earnings call was some of our key focus items this fall from the Tendo.
Stephen Berman: The recently launched Super Mario Course Complete Place at, is a must-have for any Super Mario fan.
Stephen Berman: You could experience the fun of conquering a course just like the iconic video games. Help me Mario climb the famous stairs using the spinning lever.
Stephen Berman: The set comes with a two-nep-inch Mario figure, interactive stairs, flagpole castle, and a base platform offering multiple ways to play and display.
We are also highlighting one of the most sought-after and best selling toys, the Mario Cart Mini Antigravity RC Racer. Mario can race in a standard mode or switch to Antigravity mode for drifts and thrilling tricks.
The enhanced performance of this RC allows you to pop wheelies and perform 360 degree spins with an impressive range of up to 100 feet.
It's simply put a great toy
And from another iconic Nintendo IP, we're offering from the world a legend of Zelda, the link with Power Shield and Swort Action figure inspired by the legend of Zelda, Greta the Wild.
Also, in our last call, we avoided discussing Sonic 3 due to the embargo issues. But since then, the product has begun to hit the shelf and has generated some great reactions.
The five-inch figures are the core segment within the line with a nice range of characters and styles.
Stephen Berman: and our key driver is our ultimate talking sonic. The 12-inch scale movie-style figure has 15 points of articulation and features over 30 iconic and humorous phrases and sounds from the movies.
These items are available across all major accounts leading up to the films released this December.
I also wanted to point out we have an exciting new line of toy supporting the Holiday Launch of Moana 2. Our product line celebrates the new music, new caricatures, and the new outfits consumers will experience what they see Moana 2 and theaters is holiday season.
Stephen Berman: Mawana sings one of her iconic songs in the new Jack's Large Doll to complement the story, Jack's also launching a large doll of Mawana's new little sister, Simea. Simea will capture your heart in the story and at retail.
Lastly, but not least, as a reminder, the extensive line of product space on the Simpsons are continuing to be delivered to retail and we have seen extremely strong cell through performance today.
As mentioned earlier, our November and December calendars are filled with great placement at retail for a broad portfolio of businesses.
I strongly encourage you to get out to the retail this holiday season and look for jacks products and I hope you will agree that our retail execution can stand with the very best in the industry a cross a wide range of IP.
Stephen Berman: As always, thank you for your support and interest and happy Halloween. Operator.
Thank you.
At this time, we will start our Q&A session. As a reminder to ask a question, you will need to press star-1-1 on your telephone and wait for your name to be announced.
To withdraw your question, please press star 11 again.
Speaker Change: Please stand by while we compile the Q&A roster.
Our first question today is from Eric Better from SmallCap Consumer Research. Your line is open.
Eric Better: Good afternoon, congratulations.
Thank you, I get up to noon.
Oh, damn!
We talked a little bit about the outdoor segments and the opportunities there. Obviously you have the authentic brands for us beginning to flow out. I know it's only the skateboarders right now. But you know how?
I'm positive in confidence there when you look at that potential to have that drive really kind of be found to our business and kind of offset some of the seasonality that you have.
Thank you, Eric. First off, we just recently launched the Element portion of our initiative with authentic brand group and we launched it with a retailer called Academy to get initial reads.
and the cell-throughs that we launched have been...
Nothing but tremendous. It's been in the numbers that were there in 2022.
Eric Better: and they are now regrouping and looking at.
25, much more aggressively. So the initial start and initial launch has been very successful.
That being said, we have planned for this spring.
to launch a kind of a breath of product from the element skateboard line to our new rock sea floaties that will be done at exclusives at one of our major retailers and our new distribution platform with all the new seasonal products will just be launching during first quarter.
That being said, our current existing business, which is our seasonal ball pits, tents, outdoor, play products, the outdoor furniture.
It's had a difficult comparison over the last few years during the container issues with bulk products that was so expensive and during the COVID period. But now we're seeing better comparisons. We saw it in this first third quarter and we will look to have growth for that segmentation in 2025. So it's really diverse.
Eric Better: and Steverce with the authentic brand's group from Quick Silver, Rocksy.
Elimance and Juicy Contour amongst some of the names. And then with a lot of our friendly competitors that we do licenses with from Matel to Hazard Spinnmaster, Paw Patrol, Fisher Price, Transformers. So it's really a diverse.
Speaker Change: Product Line and much stronger than it's been over the last three years going forward.
and obviously it's really for the current movies but I want to ask you about...
So the things for 2025, like dog man coming out in the beginning of the quarter, the beginning of the year, you know, that's usually, I think from our correct, the most of the other movies that's the holiday movies work is first half. But for things like this, how do you look upon these pieces of somebody at odds?
Speaker Change: to the potential here.
So, in fact, last night it's a good question. We're not that I had a call with Asia this morning, I call with all of our group looking at the potential opportunities. Because Dogman sold over 60 million books since 2016, it's first movie.
They've had 7th as of last night 17.2 million views of their trailer. Sonic 3 has had 16.5 so it's a very strong telling, whether you're having a very good um...
Background of what Sonics been around in the success of Sonic and seeing Dog Man having that. So we are cautiously optimistic with it. We won't be bringing in heavy inventory based off of not knowing, but the retail receptiveness.
is extremely strong and it will be nice, it depends how big it will be, we don't know, but if you just look at these stats and they receptive it, it's been great. There's...
Go ahead and go. You know, Moana 2 launches during the November of this year and really what happens when we look at Moana or a frozen or an inconto and so on. The first part is great but usually if the movie does well in the music does well, the
The following year would stream if it's where the legs come from so we're looking excited for Moana 2
and then the later part is the Sonic 3 movie which is coming out. That's late in December, December 20th which we have great sales but if the movie successful we look at having some good tailwins for that going into the...
Speaker Change: The 2020 5th. In addition, there's some new movies coming out which we're looking at in disguise which we have Minecraft, you have Snow White.
You have had a train your dragon, demon slayer, Paw Patrol, Lilo and Stitcher. So there's a lot you have Harry Potter and Pokemon that we now just got right for an EMEA. So there's a good plethora and abundance of...
I.P. that's out there that will help carry along some of the IP-driven lines at the same time. But I'd like to reiterate again, and we've seen it in this quarter, we've seen it through the year, our evergreen portions of our businesses.
are doing very well and we're very excited about the strength that we have and if we continue to grow the portfolio management that we've been focused on
Speaker Change: and the addition to potential strong IP. That just builds well extremely well for the company and has I re-adraded for the last two quarters.
Speaker Change: being debt-free allows us free at the lot of capital to be able to utilize for new initiatives, new licenses and build it out in an international structure.
Okay, let me for one quick other quick one. You've talked about this target private label product that's seen it. It looks great. Obviously there are other retailers that have checkout counters and other pieces. Is that something you can leverage into other potential accounts on a separate private label? Thank you.
So the target initiative has been terrific. The relationship that we have with target is phenomenal, the success of the...
The F-
Speaker Change: Castro, Mr. Our New Check Lane, item the cart is doing very well. We will build that portfolio with Target at the same time. There's other opportunities, especially international, that we are launching various initiatives in that private label program. And we will announce during the
First half of 2025, a lot of new initiatives in that private label initiative program with other major retailers.
Okay great congratulations for looking at all this this one
Eric Better: Thanks Eric.
Eric Better: Thank you.
Speaker Change: We'll see you next time. Our next question comes from Tom Fortay with the masks and group. Your line is open.
Tom Fortay: Great, thanks for your first off, Stephen and John Kimble, I have one question and one follow up.
Tom Fortay: is a very important idea of what you're doing. So, Stephen, when you consider the value of intellectual property that you license or considering licensing, what are your current thoughts in the state of box office? And is it less important for IP to be associated with or supported by hit films?
Great question.
Stephen Berman: I.P. The article as well as just IP that's not the article is important. I'll give you the examples to that. So we have a complete line of Princess product, and a very successful line called Princess Toiletion, which we do with the Walt Disney Company that doesn't align itself with any theatrical...
Company and Movies in Princess and it does extremely well. Our current frozen line that we've extended into style collection as well.
Does it necessarily need the theatrical IP behind it? They kind of do well without it. Sometimes theatrical initiatives are built up and then slightly go away in time. So the basic portfolio we have from the previous call it.
The organic princesses that everyone knows of the Rapunzel, the Snow White and so on to the Frozen's and then you get the Rias and you get the Mowanas that get added into the Portfolio.
Those always
and Hans, and bring a new consumer's versus what was the past.
If you think about it, frozen one was in 2013 November. We're now 11 years into it, you know, and it's still extremely strong with no new IP coming until 2027. I think it's when the Walt Disney company mentioned they're doing it. So right now our business suit and Walt Disney platform is doing extremely well without having heavy IP behind it. But then again you get the move on a two that brings a lot of excitement to the retail trade and
Based off what we've seen based off what retail retellers seen globally. It's extremely exciting and we're happy and we've had a year.
A year before when we won a 1K Mathemat so we kind of have an understanding. But it's a portfolio managed mixes what we do with some bits general IP, elements, itself, rocks, the Quicksilbert are not the HCIP but they are well grounded IP that's known worldwide. So you've got to take a portfolio platform management into various categories which are in.
At the same time we're looking at diverse distribution platforms, not just going necessarily in the normal toilet trade, but from the Dixporting Goods, the Academy Sporting Goods, the Value Chains. There's so many new avenues that we're achieving distribution.
So it's not necessary just the new IP, it's distribution, new IP, and building off the basic IP that we have.
Great, thank you for that, very helpful. Alright, so second, can you give your current thoughts and competition and your ability to secure additional shelf space with your new product initiatives such as the Sinsund's Line?
It's very interesting so
The toy world is changing and we've seen several different companies have
Issues over the years, some of which have turned into bankruptcy and so on. And for us we're looking at garnish more and more shelf space. So when a company has an issue and they can't ship.
There's usually white space and a retailer knows that one thing Jack's specific is known for is quick to market reaction and we could help the retailer when someone's not be able to perform it over a property's not performing so that's something that's very beneficial to us.
Stephen Berman: The competition, it's there but we just focus on what we do best, which is...
Fuxed on making sure the retailers.
Make Great Margin and the consumer gets great product at a great price.
Stephen Berman: and by doing that, we are garnishing more and more shell space and then again, when there's not the shell space available, we have extremely strong placement with exclusive products globally with retailers that allows the retail to promote the products which then carries further products in our categories and in addition to that.
We do a complete line of out-of-eye placements that allows you to not only have the in-line initiatives that you see at retail but to be out-of-eye of the gunner's more.
Stephen Berman: Retail Footprint and allowing...
The Consumer to See Products Board just in the toy aisle. So for instance, the check lane stands a Walmart we do a terrific job with our Mario, our Sonic, and our Princess at check lane. So we just look at every avenue and every way of distribution and normally it's slightly different than our competitors just because of our nimbleness as a company.
Great, 16.
Speaker Change: Thank you.
Stephen Berman: Thank you.
And our next question comes from Eric Wald with BRB Riley Securities, your line is open.
Eric Wald: Thanks for taking my question and the glad to join my next course call.
Eric Wald: Quick follow up, it's kind of a little bit of a prior comment.
I'm going to move the new IP and the new product coming out. I know it's difficult to discuss specific licenses or IP. As you move into stronger films, starting with this quarter and then presumably, you will be more so next year.
and kind of content led peace becomes a bigger driver than it had been over the past, you know, 12-ish months.
What are you seeing from retailers as they're designed to allocate shell space and other ordering patterns around content led. How confident are they going to be taking inventory up front versus something you may have to chase if that demand exceeds their expectations.
Eric Wald: So let me give you an example and it'll go from dog manages in January that
Reaters, and a lot of these retailers also have children. Know the books extremely well, you know, they sold over 60 billion pieces, but it's still an unknown because there's never been real product after the market.
So as we and they are conservative in the approach that we're taking, we do have a plan once you see self-reusuality quick to market and bring in a product to achieve the goals that enough to keep the shelf space.
What retailers are doing now more than ever and I think it's the economy, its elections and so on. Our buying things that are relatively comfortable to them that they know.
and the retailers want to make sure that themselves are having products that are consistent, that they can count on as well. Because the risk factor of going into IP that may not work, it takes up shell space, it takes up profitability and you lose traction with your consumer. So we have such a real strong relationship with the retailers globally that we work very much hand in hand and we work very much hand in hand with our IP partners.
So we manage it very well to where we can react if something takes off but we will never as Jack's bringing a...
Eric Wald: Kind of inventory to bet on something in case it doesn't work. If something could be a grand slam for a jack that may be a home run because we won't take that risk.
but a reverse of something was planned to be a double and it goes into a home run, we could actually grab and jump onto it. So, it's just a constant communication with our retailers. In fact, right now we have a majority of our salespeople.
Eric Wald: Out at all of our major retailers right now, showing up the remaining part of this holiday season, and truly right now we're preparing for the first half and second half of 25 because we're very comfortable in our line. We see next year being a relevant of the elections a strong year for Jacks just we feel comfortable with where we're at with our portfolio of brands and categories.
So we're really comfortable with everything.
Perfect. And then follow the question, John. You obviously talked about the two three margin and kind of the puts and takes for some last year for the quarter. As you move over the holidays season, what should we think about sure the puts and takes for gross margin this year versus what you experience last year?
I think.
I think sort of trying to isolate the quarter year over year is probably a little bit bit of fall precision.
To be honest, in Q4, ends up being a smaller, one of our smaller quarters, as you know, and therefore, it doesn't take much to move the percentage.
But, you know, I'd reiterate the comment we made on the call that we still feel pretty good about.
on a full year basis being at least at 30, which is something that we've said for some time. And I know some people had some doubts about earlier in the year with some of our kind of Q1 results. But we're still heading towards that outcome. I hope.
Eric Wald: and I think that's a great question.
Eric Wald: Alright.
Speaker Change: Thanks, sir.
I'm showing no more questions at this time, so I would now like to turn it back to stay at Berman for closing your marks.
Stephen Berman: Ladies and gentlemen, thank you very much for the time on the call, which everybody, a happy Halloween and look forward to speaking to you on our next call. Thank you very much.
This does conclude the program you may now disconnect.