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

Note 3—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 and (ii) Costumes.

 

The Toys/Consumer Products (“TCP”) 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 gross profit and 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 as of December 31, 2025 and 2024 and for the three years in the period ended December 31, 2025 are as follows (in thousands):

 

    Year Ended December 31,  
    2025     2024     2023  
    TCP     Costumes     Total     TCP     Costumes     Total     TCP     Costumes     Total  
Net Sales   $ 461,937      $ 108,734      $ 570,671     $ 570,018     $ 121,024     $ 691,042     $ 580,686     $ 130,871     $ 711,557  
Cost of Sales (A)     304,333       81,258       385,591       389,534       88,487       478,021       388,260       99,944       488,204  
Gross Profit     157,604       27,476       185,080       180,484       32,537       213,021       192,426       30,927       223,353  
                                                                         
Direct selling expenses     31,633       5,225       36,858       33,255       6,850       40,105       33,604       3,383       36,987  
Product development and testing expenses     8,340       2,464       10,804       8,059       2,838       10,897       6,740       2,564       9,304  
Divisional general and administrative expenses (A), (B)     22,520       11,518       34,038       28,539       12,341       40,880       23,746       13,495       37,241  
Allocated headquarter general & administrative expenses (A), (C)     73,056       16,106       89,162       67,810       13,645       81,455       67,409       13,305       80,714  
Income (loss) from operations     22,055       (7,837 )     14,218       42,821       (3,137 )     39,684       60,927       (1,820 )     59,107  
Income (loss) from joint venture                     —                       —                       (565 )
Other income (expense), net                     450                       302                       563  
Change in fair value of preferred stock derivative liability                     —                       —                       (8,029 )
Loss on debt extinguishment                     (427 )                     —                       (1,023 )
Interest income                     995                       841                       1,344  
Interest expense                     (471 )                     (1,095 )                     (6,451 )
Income before provision for (benefit from) income taxes                    $ 14,765                     $ 39,732                     $ 44,946  

 

(A) Includes depreciation and amortization  $10,123   $110   $10,233   $9,925   $121   $10,046   $8,409   $176   $8,585 

 

(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.

 

   December 31, 
   2025   2024 
Assets        
Toys/Consumer Products  $419,064   $429,254 
Costumes   23,133    15,615 
   $442,197   $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 December 31, 2025 and 2024 and for each of the three years in the period ended December 31, 2025 (in thousands):

 

   Year Ended December 31, 
   2025   2024   2023 
Net Sales by Customer Area            
United States  $416,605   $545,013   $557,865 
Europe   81,379    71,392    76,464 
Latin America   36,421    38,159    32,024 
Canada   24,426    20,983    26,992 
Australia & New Zealand   4,982    7,409    7,542 
Asia   4,953    6,101    8,543 
Middle East and Africa   1,905    1,985    2,127 
   $570,671   $691,042   $711,557 

  

   December 31, 
   2025   2024 
Long-lived Assets        
United States  $42,788   $53,020 
China   16,659    13,553 
United Kingdom   3,073    808 
Hong Kong   1,853    582 
Italy   717    754 
Mexico   594    31 
Canada   92    107 
France   8    41 
   $65,784   $68,896 

 

Major Customers

 

Net sales to major customers globally were as follows (in thousands, except for percentages):

 

 

    2025     2024     2023  
          Percentage of           Percentage of           Percentage of  
    Amount     Net Sales     Amount     Net Sales     Amount     Net Sales  
Target®   $ 152,028       26.6 %   $ 204,396       29.6 %   $ 215,211       30.3 %
Walmart® (*)     149,206       26.1       180,719       26.2       164,855       23.2  
Amazon®     <10 %     <10 %     73,149       10.6       74,878       10.5  
    $ 301,234       52.7 %   $ 458,264       66.4 %   $ 454,944       64.0 %

 

(*)During the year ended December 31, 2025, the Company determined that, in prior periods, net sales to two subsidiaries of Walmart Inc., were not aggregated with net sales to Walmart Inc. in the major customer disclosure under ASC 280-10-50-42. Because these entities are under common control, such sales should be presented as revenues from a single customer. Accordingly, prior-period amounts have been revised to aggregate these net sales amounts to Walmart Inc. and its subsidiaries. This revision affected only the major customer disclosure and had no impact on the Company’s consolidated financial statements for any period presented. The Company concluded that the revision was not material to previously issued financial statements.

 

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.