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Business Segments, Geographic Data and Sales by Major Customers
 3 Months Ended
Mar. 31, 2026
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 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 for the three months ended March 31, 2026 and 2025 and as of March 31, 2026 and December 31, 2025 are as follows (in thousands):

 

   Three Months Ended March 31, 
   2026   2025 
   TCP   Costumes   Total   TCP   Costumes   Total 
Net Sales  $100,095   $6,581   $106,676   $107,438   $5,815   $113,253 
Cost of Sales (A)   66,113    4,957    71,070    69,239    5,001    74,240 
Gross Profit   33,982    1,624    35,606    38,199    814    39,013 
                               
Direct selling expenses   6,955    1,209    8,164    7,966    730    8,696 
Product development and testing expenses   2,004    138    2,142    2,015    384    2,399 
Divisional general and administrative expenses (A), (B)   5,298    2,647    7,945    5,557    3,231    8,788 
Allocated headquarter general & administrative expenses (A), (C)   21,431    1,498    22,929    21,740    1,147    22,887 
Income (loss) from operations   (1,706)   (3,868)   (5,574)   921    (4,678)   (3,757)
Other income (expense), net             25              5 
Interest income             480              362 
Interest expense             (60)             (155)
Income before benefit from income taxes            $(5,129)            $(3,545)

 

(A) Includes depreciation and amortization  $2,107   $15   $2,122   $1,550   $9   $1,559 

 

(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, 
   2026   2025 
Assets        
Toys/Consumer Products  $377,859   $419,064 
Costumes   22,587    23,133 
   $400,446   $442,197 

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, 2026 and December 31, 2025 and for the three months ended March 31, 2026 and 2025 (in thousands):

 

   March 31,   December 31, 
   2026   2025 
Long-lived Assets        
United States  $40,535   $42,788 
China   18,735    16,659 
United Kingdom   2,961    3,073 
Hong Kong   1,666    1,853 
Italy   654    717 
Mexico   550    594 
France   96    8 
Canada   86    92 
   $65,283   $65,784 

 

   Three Months Ended 
   March 31, 
   2026   2025 
Net Sales by Customer Area        
United States  $74,636   $88,944 
Europe   17,379    11,810 
Latin America   6,962    7,459 
Canada   2,992    3,279 
Australia & New Zealand   2,469    613 
Asia   1,935    751 
Middle East & Africa   303    397 
   $106,676   $113,253 

 

Major Customers

 

Net sales to major customers globally for the three months ended March 31, 2026 and 2025 were as follows (in thousands, except for percentages):

 

   Three Months Ended March 31, 
   2026   2025 
       Percentage       Percentage 
   Amount   of Net Sales   Amount   of Net Sales 
Walmart (*)  $27,107    25.4%  $36,679    32.4%
Target   26,645    25.0    29,444    26.0 
   $53,752    50.4%  $66,123    58.4%

 

(*)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 condensed 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.