Answer
The press release you quoted only presents the raw financial results for Fun Funko’s second quarter of 2025 and does not spell out the specific reasons behind the 21.8 % drop in net sales (from $247.7 million in Q2 2024 to $193.5 million in Q2 2025). Because the release does not include a management commentary or a “Management Discussion & Analysis” section that would normally explain the drivers of the change, we can’t point to a single, documented cause from the information provided.
What we can infer from the data
| Metric (Q2 2025) | Metric (Q2 2024) | % Change |
|---|---|---|
| Net sales | $193.5 M vs $247.7 M | –21.8 % |
| Gross profit | $62.0 M vs $104.0 M | –40.4 % |
| Gross margin | 32.1 % vs 42.0 % | –9.9 pp |
| SG&A expense | $82.3 M vs $77.9 M | +5.6 % |
The fact that gross profit fell even more sharply than net sales (‑40 % vs ‑21.8 %) and that gross margin compressed from 42.0 % to 32.1 % suggests that the sales decline was accompanied by a shift toward lower‑margin products or higher cost of goods. In addition, SG&A expenses rose modestly, which would further squeeze profitability.
Typical factors that can generate a year‑over‑year sales decline of this magnitude for a consumer‑goods/licensing company like Funko
| Potential driver | How it could affect Funko’s Q2 sales |
|---|---|
| Weaker consumer demand – A slowdown in discretionary spending (e.g., due to tighter household budgets, higher interest rates, or a dip in pop‑culture‑driven demand) would directly reduce the volume of licensed collectibles sold. | |
| Inventory or supply‑chain constraints – Delays in production, component shortages, or shipping bottlenecks can limit the amount of product available for retailers, leading to lower net sales. | |
| Product‑mix shift – If the quarter’s assortment leaned more heavily toward lower‑priced or lower‑margin items (e.g., smaller “micro‑figures” versus premium “Pop!” figures), total revenue would fall even if unit volume held steady. | |
| Retail‑partner performance – A contraction in key retail partners’ sales (e.g., a major department‑store or e‑commerce platform pulling back inventory) would cut Funko’s topline. | |
| Seasonality – Q2 includes the summer‑shopping period; if the 2025 summer market was softer than the previous year (fewer promotional events, weaker tourism, etc.), sales would dip. | |
| Licensing‑portfolio changes – Loss of a high‑profile licensing agreement or the expiration of a popular franchise (e.g., a major movie or TV tie‑in) could reduce the appeal of new releases. | |
| Currency effects – A stronger U.S. dollar can depress the dollar‑converted value of overseas sales, though the release does not break out net sales by region. |
What you should do next
- Check the full earnings release – Companies typically issue a more detailed “press release” or a Form 8‑K filing that includes a Management Discussion & Analysis (MD&A) section. That MD&A will usually name the primary reasons for a sales decline (e.g., “reduced demand for licensed collectibles in the U.S. market” or “supply‑chain disruptions in Asia”).
- Listen to the earnings call transcript – Funko’s management likely addressed the sales shortfall during the Q2 2025 earnings call, offering concrete explanations and any corrective actions (e.g., new product launches, cost‑saving initiatives).
- Review segment or geographic data – If Funko breaks out net sales by product line (Pop! figures, apparel, accessories) or by region, you can pinpoint where the biggest drop occurred.
- Monitor broader market signals – Look at consumer‑discretionary indices, licensing‑industry reports, and macro‑economic data (inflation, consumer confidence) for the same period to see if a sector‑wide slowdown aligns with Funko’s performance.
Bottom line
Based solely on the information you provided, the press release does not specify the exact cause of the 21.8 % net‑sales decline. The numbers do indicate a significant contraction in both revenue and margin, which is often tied to weaker demand, higher cost‑of‑goods, or a shift toward lower‑margin product mixes. To obtain a definitive answer, you’ll need to locate Funko’s complete earnings release, the accompanying MD&A, or the transcript of the Q2 2025 earnings call where management would have addressed the underlying reasons.