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Funimation Parent Navarre Reports 3Q Sales Drop

posted on by Crystalyn Hodgkins
Drop in anime sales attributed to weaker release schedule, overall DVD market

Navarre Corporation, the parent company of the anime licensing and distribution company Funimation, announced on Monday that it had a net decrease in sales for the third quarter of fiscal year 2010, which ended on December 31.

Navarre does not report Funimation's results separately; instead, it reports on its overall publishing segment, which includes Funimation and Encore. This publishing segment reported net sales of US$20.9 million for the period ending December 31, a decrease of 15 percent from the net sales this time last year. Navarre credited one-third of the decrease to the closure of its BCI budget video division, which generated no sales during the quarter. Navarre said sales of anime products declined "as a result of a weaker release schedule compared to the prior year."

Operating income during the third quarter for the publishing segment was US$2.9 million, as compared to an operating loss of US$30.9 million for the same time last year, which was due to a recognition of US$34 million in restructuring and impairment charges.

On the whole, Navarre's net quarterly sales were down 22 percent and year-to-date sales down 19 percent compared to last year. However, Navarre reported that net income increased to US$7.2 million this quarter, compared to a net loss of US$47.7 million in the same quarter last year.

In the Q3 2010 Navarre Earnings Conference Call on Tuesday, Chief Executive Officer Cary Deacon said Funimation "met internal targets for the quarter," but a "weaker release schedule ... and a weak general DVD market" contributed to the decline in sales. Deacon said that Navarre is "set for expansion, now we need to find it and buy it," in reference to acquisitions by both Funimation and Encore. Funimation's license of Dragon Ball Kai (known as Dragon Ball Z Kai in English) was noted in particular.

During the conference call, Deacon also mentioned Funimation's co-production initiative, and said that Funimation's "digital initiatives continue to provide double-digit growth."

On Tuesday, Navarre's shares rose 4 cents per share, or 2.04 percent, to US$2.00.

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