16:50 h / 2021/03/12
The rebound is on for Washington-based Funko. Following some big declines driven by the COVID-19 pandemic and the cancellation of live events last year, the “purveyors of pop culture” struck back hard in Q4 with net sales increasing 6% to $226.5 million as gross margin hit 37.2% alongside gains in net income and cash flow. Most impressively, Funko’s U.S. net sales spiked 18% to $171 million, the largest domestic quarter in the company’s history.
A year ago, the future was uncertain for Funko as the company exited a successful showing at Toy Fair New York (TFNY) only to get hit with event cancellations and physical retail closures beginning in March. Following an 18% sales decline in Q1 and a whopping 49% hit in Q2, the signs of a turnaround started to emerge in Q3 as the company cut losses to just 14% amid 150% growth in digital sales thanks to a relaunched website and a diversified product mix.
In Q4, customer demand kicked in and carried through the holiday season as sales of Funko’s non-figure products grew 30% versus 2019, primarily driven by a 51% spike in sales for Loungefly items and strong consumer interest in Funko Games, plush, and accessories. Funko’s ubiquitous Pop! vinyl brand grew 1% globally with a 12% spike in the U.S. The company says that 68% of its total sales were attributable to evergreen content.
For the year, most of Funko’s remaining declines are due to the continued impact of COVID-19-related closures in Europe and other international markets. Total sales in the U.S. declined 7% for the year, with COVID-19 impact offset by growth in the mass-market, third-party e-commerce, and Funko’s own direct-to-consumer retail business.