JAKKS Pacific, Inc. JAKK continues to benefit from acquisitions, solid international footprint, focus on innovation and collaborations with popular brands. Consequently, the company’s shares have gained 36% in the past three months, compared with the industry’s rally of 4.8%. Let’s delve deeper and find out the factors driving the Zacks Rank #1 (Strong Buy) company’s growth.
Acquisitions and Partnerships: Key Catalysts
JAKKS Pacific has emerged as a diversified consumer products company buoyed by a string of acquisitions over the past several years. The company’s ability to successfully identify, close and integrate acquisitions is one of the primary factors that provide it a competitive edge. Meanwhile, JAKKS Pacific has collaborations with Disney, Skechers, Nickelodeon, Cabbage Patch Kids and Chico to manufacture toys and merchandise related to these brands. Moreover, new licensed properties, notably Aladdin, Godzilla, Toy Story 4 and Nintendo have been doing well.
JAKKS Pacific is committed toward diversifying footprint outside the United States. In sync with its endeavors, the company has opened sales offices and expanded distribution agreements for its products. Since management expects to benefit from geographic expansion, it commenced full-fledged operations at its newest sales office in Germany and France last year.
Moreover, its partnership with Meisheng is anticipated to result in robust growth in Asia. Notably, following the launch of Tsum Tsum in key international markets like Latin America and Asia, the company plans to expand its distribution in new territories going forward. The expansion initiatives are likely to strengthen its international presence and customer base. The initiatives are also expected to boost sales and profit margins and enable the company to attract licenses. International sales in third-quarter 2019 improved 3% year over year counrtesy of robust sales of Frozen 2.
Digital Innovation Bode Well
JAKKS Pacific focuses on product innovation to cope with the changing play pattern of children and boost demand. The demand for physical toys has been declining thanks to younger children’s preference for digital games and other electronic learning tools. Consistent with this trend, the company has introduced a number of mobile gaming apps and digital games, along with the physical toys, to aid the company to capitalize on demand for smartphone gaming. JAKKS Pacific is also connecting with customers through digital videos, display banners and social ads, which is likely to enhance customer experience. Such investment in digital innovation will help in brand building apart from helping the company to capitalize on the increasingly lucrative technology-based gaming market.
Additionally, the company is focused on aggressively growing online sales, realizing the importance of online retailing. Over the past few quarters, JAKKS Pacific has made every effort to create digital experiences for online shoppers such as videos, 360-degree product images and enhanced web pages. It continues to modify its sales and logistics capabilities in order to capitalize on this continued shift to online.
JAKKS Pacific, which shares space with Glu Mobile Inc GLUU, Hasbro Inc HAS and Activision Blizzard, Inc ATVI, sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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