SHAREHOLDER ALERT: Pomerantz Law Firm Investigates Claims On Behalf of Investors of Funko, Inc. - FNKO (PR Newswire)

2023-06-05 23:45

SHAREHOLDER ALERT: Pomerantz Law Firm Investigates Claims On Behalf of Investors of Funko, Inc. - FNKO

PR Newswire

NEW YORK, June 5, 2023

NEW YORK , June 5, 2023 /PRNewswire/ -- Pomerantz LLP is investigating claims on behalf of investors of  Funko, Inc. ("Funko" or the "Company") (NASDAQ: FNKO).  Such investors are advised to contact Robert S. Willoughby at  or 888-476-6529, ext. 7980.

The investigation concerns whether Funko and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices. 

[Click here for information about joining the class action]  

Throughout 2022 and 2023, Funko promoted both the planned move of its distribution center from Everett, Washington to Buckeye, Arizona , as well as the planned upgrade of the Company's enterprise resource planning ("ERP") software system. On November 3, 2022 , Funko announced its third quarter 2022 results, including earnings per diluted share of $0.28 , more than 42% below Street estimates of $0.49 per share.  In addition, Funko reported that its gross margin "in the third quarter of 2022 decreased 100 basis points" from the third quarter of 2021, and that selling, general, and administrative ("SG&A") expenses increased 63.5% "due to increased infrastructure investment to accommodate recent rapid growth and provide capacity for sustained future growth."  Funko also dramatically lowered its full year ("FY") 2022 guidance ranges for adjusted net income and earnings per diluted share, while cutting its projected FY 2022 Adjusted EBITDA margin to high single digits, from prior estimates of 14.6%. On an earnings call to discuss the results, Company management disclosed that Funko's Buckeye, Arizona distribution center had opened "without the benefit of the warehouse management software it was designed to operate with" as a result of "a delayed ERP" software system, resulting "in higher than expected short-term operating expenses and increased margin pressure." In response to an analyst question regarding how the ERP implementation delays caught Funko by surprise, Company management responded that Funko had decided to launch the new warehouse without the benefit of a fully functioning or implemented ERP system. 

On this news, Funko's stock price fell $11.58 per share, or 59.4%, to close at $7.92 per share on November 4 , 2022. 

Then, on March 1, 2023 , Funko announced its FY 2022 results and guidance for FY 2023, reporting, among other results, net income for FY 2022 that had decreased to a $5.2 million loss and Adjusted Earnings per Diluted Share that came in well below prior estimates.  Funko also disclosed that "[g]ross margin in the fourth quarter of 2022 decreased . . . driven primarily by storage and container rental charges associated with inventory in excess of warehouse capacity" and that "SG&A expenses increased 78%", including "a $32.5 million write down of capitalized costs associated with the decision not to implement [the] previously disclosed [ERP] system[.]"  

On this news, in after-hours trading on March 1, 2023 , Funko's stock price fell $3.17 per share from closing at $10.70 per share to $7.53 per share or a 29.6% drop. Funko's stock recovered somewhat during intra-day trading, but still closed down at $9.94 per share on heavy trading volume.

Pomerantz LLP, with offices in New York , Chicago , Los Angeles , London , Paris , and Tel Aviv , is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz , known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See .

Robert S. Willoughby
Pomerantz LLP
888-476-6529 ext. 7980

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