Funimation's Parent Reports 2Q Sales Down, Profits Up

posted on 2009-10-31 21:41 EDT
Navarre CEO: Funimation now has "first look at all opportunities" in anime licenses

Navarre Corporation, the parent company of the anime licensing and distribution company Funimation Entertainment, announced on Thursday a net decrease in sales for their second quarter of fiscal year 2010, which ended on September 30.

Navarre does not report Funimation's results separately; instead, it reports on its overall publishing segment, which includes Funimation, Encore, and BCI. This publishing segment reported net sales of US$21.4 million, compared to US$28.8 million in the same quarter of the previous year, a decrease of 26 percent.

In the Q2 2010 Navarre Earnings Conference Call, Chief Executive Officer Cary Deacon credited the decrease to the closure of their BCI budget video division, which “generated nominal sales in the second quarter and accounted for over half of this net sales decline."

Operating income during the second quarter for the publishing segment was US$2.5 million, compared to an operating loss of US$70.3 million during the same quarter last year. Last year's loss was largely due to a US$73.4 million non-cash goodwill impairment charge. Deacon credited this quarter's results to "increased gross margins in software publishing, which were partially offset by a relatively soft new release schedule for anime products.”

On the whole, Navarre's net quarterly sales were down 28 percent and year-to-date sales down 18 percent compared to last year, which Deacon credited to the closure of Circuit City and the continued economic recession. However, Navarre reported net income increased to US$6.4 million, compared to a net loss of US$43.9 million this time last year.

During the quarterly earnings conference call on Friday, Deacon said he was “still optimistic about Funimation and its future.” Funimation, Deacon said, is “still the market share leader” with “56 percent to 60 percent of U.S. market share.” He mentioned that Funimation has, "first look at all opportunities in terms of licenses," and that they were being "pretty selective."

Following the news of Navarre's decline in sales, the company's shares fell 24 cents per share, or 9.41 percent, to $2.31 on Friday afternoon.

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