FNKO - Funko falls as collectibles company scrambles to reverse decline

2023-08-04 15:51:36 ET

Funko ( NASDAQ: FNKO ) dropped 14% on Friday after the pop culture collectibles company delivered less-than-exciting forecasts.

FNKO also said that it reduced its workforce by 12%, or 180 positions, last week.

On Thursday, the company offered 2023 net sales guidance of $1.05B and $1.12B compared to the $1.14B analyst average estimate. Net sales for the third quarter are expected at between $280M and $310M versus the $338.45M consensus estimate.

For the second quarter, non-GAAP EPS of -$0.43 missed the average analyst estimate by $0.03. Revenue of $240M missed by $10.29M.

“For the 2023 second quarter, net sales and adjusted EBITDA loss were within our guidance, and SG&A expenses were better than expected and an improvement over the preceding quarter,” interim Chief Executive Officer Michael Lunsford said in a statement.

“Ongoing inventory de-stocking by some of our larger U.S. wholesale customers impacted our topline and profitability. We anticipate that this softness will continue in the second half of this year and, as a result, we have lowered our full-year guidance.”

Earlier this year, the company implemented an operational improvement and cost reduction plan that is expected to generate annualized cost savings of between $155M and $185M.

“We are ahead of schedule on the key elements of our cost reduction plan,” said Steve Nave, Chief Financial Officer and Chief Operating Officer.

“Despite this progress, last week we implemented a plan that includes, among other things, another round of cost-lowering initiatives and further reductions to our workforce of approximately 12%, or 180 positions. These actions are estimated to generate approximately $38M of incremental annualized savings, of which approximately $20M is related to the workforce reduction.”

FNKO is also reducing the number of product lines and complexity in the business as part of its turnaround efforts.

Last month, Funko ( FNKO ) tumbled nearly 18% amid news that CEO Brian Mariotti was stepping down, months after he was reappointed following a major earnings miss.

A search for a permanent replacement includes internal and external candidates. Mariotti remains a member of the Funko ( FNKO ) board of directors.

Funko ( FNKO ) shares are down 41% so far in 2023.

More on FNKO:

• Funko, Inc. ( FNKO ) Q2 2023 Earnings Call Transcript
• Funko Non-GAAP EPS of -$0.43 misses by $0.03, revenue of $240M misses by $10.29M
• Funko sinks as CEO appointed months ago after earnings miss to step down

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