Sales are down across all of Funko’s brands this quarter as company leadership tries to return the collectibles giant to profitability. 

In Q3, Funko generated US$312.9 million in net sales, down 14.4% from the previous year. The toyco’s core collectibles business was hit the hardest during the quarter, with sales dropping 17.4% to US$233.3 million. Loungefly sales dipped to US$57.4 million (down 3.6%), while other brands fell to US$22.2 million (down 5.9%). 

Funko aims to reduce its total SKUs by 30% so it can eliminate expensive short-term storage costs for inventory, according to its investor presentation published last week. It will also create new revenue streams by launching products that don’t require licensing fees and royalties. 

This strategy includes Q3’s Pop! Yourself toy line, which allows consumers to create Pop! versions of themselves online using Funko’s e-commerce platform, similar to Hasbro’s Selfie Series 3D-printed figures. Funko’s DTC business is the company’s largest distribution channel, accounting for 11% of the company’s net sales last year. In comparison, no other mass retail partner or distributor accounts for more than 7% of the toyco’s sales. 

The company will also look to expand its portfolio with more music, sports and anime licenses, which is where Funko is seeing more demand for products from fandoms. As of August, its licensing portfolio offerings include Pokémon, Sonic the Hedgehog, Disney, Harry Potter and Universal.