Dive Brief:
- Toy company Funko reported Q2 net sales of $193.5 million, a 22% drop year over year, during a quarter that was “impacted by a dynamic and uncertain tariff environment,” Interim CEO Mike Lunsford said in a statement.
- The company swung to a loss of $41 million from a net income of $5.4 million year over year, according to a Thursday announcement.
- Funko filed paperwork with the U.S. Securities and Exchange Commission regarding an at-the-market equity offering, which will allow the company to sell shares of its common stock up to $40 million. Funko also hired an outside firm to advise it on refinancing its debt, which is due in September 2026.
Dive Insight:
Funko worked to mitigate the financial impact of changing U.S. tariff policies during Q2, which included a workforce reduction of around 20%. The company also raised prices and accelerated its shift in production out of China to sourcing in other countries.
The past quarter saw a disruption in sales related to tariffs which paused orders out of China “by our direct import customers,” CFO Yves LePendeven said.
The toy company is expecting a turn in the second half of the year with improved performance.
“Looking ahead, we expect headwinds to moderate and our business to improve as a result of the actions we’ve taken to cut costs, diversify product sourcing and adjust prices,” Lunsford said. “The team is focused on stabilizing the business, accelerating execution on growth initiatives and unlocking Funko’s long-term potential.”
Financial services company Moelis & Company was hired to guide Funko regarding the refinancing of its debt and will also “evaluate other financial and strategic options,” according to LePendeven.
Funko’s most recent permanent CEO, Cynthia Williams, exited her role earlier in the summer after a little over a year. Lunsford was previously Funko’s interim chief between 2023 and 2024, following then-CEO Brian Mariotti taking a leave of absence and subsequently stepping down from the chief executive position.