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Business Segments, Geographic Data and Sales by Major Customers
 3 Months Ended
Mar. 31, 2025
Segment Reporting [Abstract]  
Segment Reporting Disclosure [Text Block]

Note 2 — Business Segments, Geographic Data and Sales by Major Customers

 

The Company is a worldwide producer and marketer of children’s toys and other consumer products, principally engaged in the design, development, production, marketing and distribution of its diverse portfolio of products. The Company’s segments are (i) Toys/Consumer Products (“TCP”) and (ii) Costumes.

 

The Toys/Consumer Products segment includes action figures, vehicles, play sets, plush products, dolls, electronic products, construction toys, infant and pre-school toys, child-sized and hand-held role play toys and everyday costume play, foot-to-floor ride-on vehicles, wagons, novelty toys, seasonal and outdoor products, kids’ indoor and outdoor furniture, and related products.

 

The Costumes segment, under its Disguise branding, designs, develops, markets and sells a wide range of every-day and special occasion dress-up costumes and related accessories in support of Halloween, Carnival, Children’s Day, Book Day/Week, and every-day/any-day costume play.

 

The Company’s Chief Executive Officer and Chief Financial Officer have been identified jointly as the Chief Operating Decision Maker (“CODM”). The CODM manages and allocates resources on a segment basis. The determination of the two segments is consistent with the financial information regularly reviewed by the CODM for purposes of evaluating performance. Results are regularly reviewed in comparison with current budget, prior forecast, prior year and recent years’ performance in that quarter.

 

Segment performance is measured at the operating income (loss) level. All sales are made to external customers and general corporate expenses have been attributed to the segments based upon relative sales volumes. Segment assets are primarily comprised of accounts receivable and inventories, net of applicable reserves and allowances, goodwill and other assets. Certain assets which are not tracked by operating segment and/or that benefit multiple operating segments have been allocated on the same basis.

Results are not necessarily those which would be achieved if each segment was an unaffiliated business enterprise. Information by segment and a reconciliation to reported amounts for the three months ended March 31, 2025 and 2024 and as of March 31, 2025 and December 31, 2024 are as follows (in thousands):

 

   Three Months Ended March 31, 
   2025   2024 
   TCP   Costumes   Total   TCP   Costumes   Total 
Net Sales  $107,438   $5,815   $113,253   $82,910   $7,166   $90,076 
Cost of Sales (A)   69,239    5,001    74,240    65,055    3,969    69,024 
Gross Profit   38,199    814    39,013    17,855    3,197    21,052 
                               
Direct selling expenses   7,966    730    8,696    6,846    1,251    8,097 
Product development and testing expenses   2,015    384    2,399    1,665    299    1,964 
Divisional general and administrative expenses (A), (B)   5,557    3,231    8,788    6,237    4,012    10,249 
Allocated headquarter general & administrative expenses (A), (C)   21,740    1,147    22,887    20,317    1,749    22,066 
Income (loss) from operations   921    (4,678)   (3,757)   (17,210)   (4,114)   (21,324)
Other income (expense), net             5              138 
Interest income             362              376 
Interest expense             (155)             (143)
Income before benefit from income taxes            $(3,545)            $(20,953)

 

(A) Includes depreciation and amortization  $1,550   $9   $1,559   $1,499   $15   $1,514 

 

(B)Consist mainly of payroll and related expenses, rent, depreciation and other general and administrative expenses.
(C)Consist mainly of payroll related expenses, rent, depreciation and other general and administrative expenses.

 

   March 31,   December 31, 
   2025   2024 
Assets        
Toys/Consumer Products  $388,178   $429,254 
Costumes   17,693    15,615 
   $405,871   $444,869 

Net revenues are categorized based upon location of the customer, while long-lived assets are categorized based upon the location of the Company’s assets. The following tables present information about the Company by geographic area as of March 31, 2025 and December 31, 2024 and for the three months ended March 31, 2025 and 2024 (in thousands):

 

   March 31,   December 31, 
   2025   2024 
Long-lived Assets        
United States  $50,369   $53,020 
China   15,850    13,553 
Hong Kong   2,236    582 
Italy   776    754 
United Kingdom   735    808 
Mexico   512    31 
Canada   103    107 
France   41    41 
   $70,622   $68,896 

 

   Three Months Ended 
   March 31, 
   2025   2024 
Net Sales by Customer Area        
United States  $88,944   $70,430 
Europe   11,810    5,735 
Latin America   7,459    7,996 
Canada   3,279    3,370 
Asia   751    965 
Australia & New Zealand   613    1,346 
Middle East & Africa   397    234 
   $113,253   $90,076 

 

Major Customers

 

Net sales to major customers globally for the three months ended March 31, 2025 and 2024 were as follows (in thousands, except for percentages):

 

   Three Months Ended March 31, 
   2025   2024 
       Percentage       Percentage 
   Amount   of Net Sales   Amount   of Net Sales 
Walmart  $36,260    32.0%  $21,294    23.6%
Target   29,444    26.0    26,667    29.6 
   $65,704    58.0%  $47,961    53.2%

 

No other customer accounted for more than 10% of the Company’s total net sales.

 

The concentration of the Company’s business with a relatively small number of customers may expose the Company to material adverse effects if one or more of its large customers were to experience financial difficulty. The Company performs ongoing credit evaluations of its top customers and maintains an allowance for potential credit losses.