Despite a troubling outlook for the upcoming year, Funko will push forward with its 2020 game releases.
The company reported today a net loss of $5.7 million with an 18% decline in net sales for the first quarter of 2020. CEO Brian Mariotti said the company had been on track for the quarter, but was derailed by the impact of the pandemic.
And things are going to get worse before they get better. On an investor conference call, the company said it expects a 60% decline in sales during Q2.
Funko is cutting back on some production, but not games. The company will release a slew of titles in October including an expansion of their Funkoverse line, holiday card games featuring various iconic brands, a new mini pop battle game, and other IP driven titles from Kellogg’s Pop-Tarts and the Groundhog Day movie.
Funko have been proactively dealing with the downturn having furloughed 40% of its global workforce, and cutting executive and board salaries by 20%. The company also cut production and are moving some non-game releases to Q3.
“Looking at the second half of 2020, we are remaining nimble and pivoting as needed to adapt to changes in content release dates, as well as the needs of our retail partners as they navigate customer capacity limits and the timing of reopenings,” said Mariotti.
“Additionally, we are directing greater resources toward our e-commerce growth strategy, which includes building a robust online platform, while developing a more powerful selling model and broadening our product catalog on Funko.com.”
Funko will work to expand its direct to consumer capability by increasing the functionality of Funko.com. It will also be moving inventory to warehouses better capable of online fulfillment.
The company said online sales grew 50% in Q1, but still represented a small part of total sales.