4Kids feels recession's sting in '08 results
By Staff -- Playthings, 3/16/2009 8:03:00 AM
NEW YORK—4Kids Entertainment saw its full year and fourth quarter 2008 results fall as consumers’ lack of confidence “deeply impacted” the children’s programmer and trading card game marketer’s sales and licensing revenue.
For the year ended December 31, 2008, 4Kids’ net revenue reached $63.7 million, up from $55.6 million for the same period in 2007, helped by approximately $15.3 million from the sale of Chaotic trading cards. The gain, though, wasn’t enough to keep the company in the black. Its 2008 net loss was $36.8 million, or $2.79 per diluted share, up from $23.3 million, or $1.77 per diluted share, for 2007.
The year-end results followed a fourth quarter in which net revenue slipped $2.2 million to $14.3 million and its net loss compared to 2007’s Q4 grew $2.8 million to $19.6 million, or $1.48 per diluted share.
“The sharp economic downturn and associated severe deterioration of consumer confidence starting in September 2008 deeply impacted our licensing revenue and trading card game sales in the fourth quarter,” said Alfred R. Kahn, 4Kids’ chairman and CEO. “Our results were also impacted by declining licensing revenue throughout the year from some of our more established properties.”
4Kids’ fourth quarter results were particularly stung by a sudden drop-off in Chaotic Trading Card Game sales, according to Kahn.
“While Chaotic trading card sales for the first nine months of 2008 were in line with our expectations, sales for fourth quarter fell well below our expectations at $0.5 million,” he said. “This decline in sales is primarily due to retailers and distributors reducing, canceling or returning orders in an effort to reduce their inventory as they respond to the rapid, steep economic decline. In addition to impacting sales, it also triggered an increase in our reserve for returns and allowances and a $3 million write-down of our trading card inventory.”
Despite the fourth quarter sales numbers, Chaotic finished the year as the number three selling trading card game in the U.S. behind Pokémon and Yu-Gi-Oh!, according to 4Kids.
Kahn believes Chaotic “still offers a tremendous opportunity for 4Kids in the future as we roll out the Chaotic trading cards in the UK, France and Germany during the first half of 2009. Chaotic will also be bolstered by the revised and improved Chaoticgame.com website that went live on March 3 and is now available in English, French, German, Spanish and Italian. We also expect additional Chaotic licensed products to be available from our master toy licensee, Spin Master, and our videogame partner, Activision Publishing, which is scheduled to release a Chaotic video game…in fall 2009.”
Earlier this month, 4Kids announced that more than 1,000 7-Eleven convenience stores had begun stocking its Chaotic Trading Card Game.
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