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Business Segments, Geographic Data and Sales by Major Customers
 6 Months Ended
Jun. 30, 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 and six months ended June 30, 2026 and 2025 and as of June 30, 2026 and December 31, 2025 are as follows (in thousands):

 

   Three Months Ended June 30, 
   2026   2025 
   TCP   Costumes   Total   TCP   Costumes   Total 
Net Sales  $97,507   $41,731   $139,238   $80,379   $38,715   $119,094 
Cost of Sales (A)   64,006    30,271    94,277    53,293    26,778    80,071 
Gross Profit   33,501    11,460    44,961    27,086    11,937    39,023 
                               
Direct selling expenses   6,226    2,274    8,500    4,987    1,723    6,710 
Product development and testing expenses   2,305    958    3,263    2,180    889    3,069 
Divisional general and administrative expenses (A), (B)   5,845    2,993    8,838    5,805    2,956    8,761 
Allocated headquarter general & administrative expenses (A), (C)   17,037    7,465    24,502    15,782    7,484    23,266 
Income (loss) from operations   2,088    (2,230)   (142)   (1,668)   (1,115)   (2,783)
Other income (expense), net             6,976              25 
Loss on debt extinguishment             —              (417)
Interest income             788              395 
Interest expense             (55)             (145)
Income (loss) before provision for (benefit from) income taxes            $7,567             $(2,925)
                               
(A) Includes depreciation and amortization   $ 2,538     $ 55     $ 2,593     $ 1,858     $ 42     $ 1,900  

 

(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.

   Six Months Ended June 30, 
   2026   2025 
   TCP   Costumes   Total   TCP   Costumes   Total 
Net Sales  $197,602   $48,312   $245,914   $187,817   $44,530   $232,347 
Cost of Sales (A)   130,119    35,228    165,347    122,532    31,779    154,311 
Gross Profit   67,483    13,084    80,567    65,285    12,751    78,036 
                               
Direct selling expenses   13,181    3,483    16,664    12,954    2,452    15,406 
Product development and testing expenses   4,309    1,096    5,405    4,195    1,273    5,468 
Divisional general and administrative expenses (A), (B)   11,143    5,640    16,783    11,362    6,188    17,550 
Allocated headquarter general & administrative expenses (A), (C)   38,468    8,963    47,431    37,522    8,630    46,152 
Income (loss) from operations   382    (6,098)   (5,716)   (748)   (5,792)   (6,540)
Other income (expense), net             7,001              30 
Loss on debt extinguishment             —              (417)
Interest income             1,268              757 
Interest expense             (115)             (300)
Income (loss) before provision for (benefit from) income taxes            $2,438             $(6,470)
                               
(A) Includes depreciation and amortization   $ 4,645     $ 70     $ 4,715     $ 3,409     $ 50     $ 3,459  

 

(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.

 

   June 30,   December 31, 
   2026   2025 
Assets        
Toys/Consumer Products  $381,647   $419,064 
Costumes   66,846    23,133 
   $448,493   $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 June 30, 2026 and December 31, 2025 and for the three and six months ended June 30, 2026 and 2025 (in thousands):

 

   June 30,   December 31, 
   2026   2025 
Long-lived Assets        
United States  $38,486   $42,788 
China   19,935    16,659 
United Kingdom   2,903    3,073 
Hong Kong   1,489    1,853 
Others combined   1,290    1,411 
   $64,103   $65,784 

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2026   2025   2026   2025 
Net Sales by Customer Area                
United States  $108,251   $86,990   $182,887   $175,934 
Europe   16,021    14,657    33,400    26,467 
Canada   7,080    8,826    10,072    12,105 
Latin America   4,137    6,047    11,099    13,506 
Asia   2,216    1,448    4,151    2,199 
Australia & New Zealand   1,533    886    4,002    1,499 
Middle East & Africa   —    240    303    637 
   $139,238   $119,094   $245,914   $232,347 

 

Major Customers

 

Net sales to major customers globally for the three and six months ended June 30, 2026 and 2025 were as follows (in thousands, except for percentages):

 

   Three Months Ended June 30,   Six Months Ended June 30, 
   2026   2025   2026   2025 
       Percentage       Percentage       Percentage       Percentage 
   Amount   of Net Sales   Amount   of Net Sales   Amount   of Net Sales   Amount   of Net Sales 
Walmart (*)  $47,700    34.3%  $33,320    28.0%  $74,807    30.4%  $69,999    30.1%
Target   32,760    23.5    30,630    25.7    59,405    24.2    60,074    25.9 
   $80,460    57.8%  $63,950    53.7%  $134,212    54.6%  $130,073    56.0%

 

(*)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 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.