Thomas Forte's questions to JAKKS Pacific Inc (JAKK) leadership • Q1 2025
Question
Thomas Forte asked a series of questions regarding the toy industry's ability to pass costs to consumers, the feasibility of moving manufacturing out of China, the impact of tariffs on licensing visibility, and if the environment is creating new M&A opportunities.
Answer
Stephen Berman (executive) stated that tariff costs are essentially a consumer tax that will be passed on, likely impacting sales of higher-priced items most. He noted that while some large plastic items can be sourced in the U.S., the majority of manufacturing will remain in Asia due to specialized skills and safety track records, with Chinese vendors often leading expansion into other Asian countries. On the licensing front, Berman sees the current disruption as an opportunity to gain share and partnerships as indebted competitors struggle. Similarly, he confirmed that the challenging environment is creating more strategic M&A opportunities, which JAKKS is well-positioned to evaluate given its debt-free balance sheet and strong liquidity.