Funko turned a corner with its Q2 report on Thursday, despite a sales decline in the U.S.; and shared plans for changes to its distribution under new CEO Cynthia Williams (see “WotC Prez to Funko“), who left Wizards of the Coast to take her new post. The quarter was a banger by recent standards, the first profitable quarter and first year-over-year quarterly sales increase since Q3 2022.
Worldwide sales were up 3% to $247.7 million from $240.0 million last year due to increase in Europe and other international markets. Sales in the U.S. were down 5% to $163.0 million from $171.1 million in the year ago quarter.
Newly appointed CFO Yves LePendeven listed a number of reasons for the U.S. sales decline in the conference, including a continuing retreat from the mass channel, which began about 18 months ago; the 30% reduction in SKUs that began last year, and the weak content slate for licensed products, which had more of an effect in the U.S. than in international markets.
Funko reported net income of $5.4 million, a big improvement from the $75.9 million loss in Q2 2023. One factor in the improved margin was Funko’s new strategy of selling “aged inventory” into the value channel (dollar stores and closeout stores), LePendeven noted.
Williams also described plans for changing Funko’s distribution further in the coming months as part of her four principles by which she is running the company. “We are taking a fan-centric approach, which revolves around delighting our core fans, attracting and serving new fans, selling where the fans are and improving the fan experience,” she said.
Selling “where the fans are” includes growing Funko’s direct-to-consumer business, already 25% of sales, a licensed store model, in which the company works with an existing retailer on Funko stores and new points of sales specific to IPs, such as selling Funko’s sports products in stadiums, on campuses, or in sporting goods stores.
Funko re-affirmed its full year guidance for 2024 (see “Funko Cuts Loss to $23.7 Million“).
Source: ICV2
