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Funko CEO touts 'competitive advantage' with Fortnite products

Category: Finance,Retail

Toymaker Funko has a notable "competitive advantage" in the world of online battle-royale gaming craze Fortnite, its CEO Brian Mariotti told CNBC's Jim Cramer on Friday.

"We're the first one to grab a license, we're the first one to have the product in the marketplace and our category, so we think we have a competitive advantage there," Mariotti said on "Mad Money." "Early sell-throughs seem very, very positive. I think this is going to be a great property for us."

One of the most-played games on the internet, Fortnite has toymakers racing to create products around its wildly popular brand. Hasbro also recently announced a partnership with its publisher, Epic Games, to create a Fortnite-themed Monopoly game.

Funko, whose popular big-headed dolls have taken the world by storm, sells various licensed collectibles tied to everything from sports to movies to music. Shares of the toymaker were down 21.45 percent by day-end on Friday after an earnings report that disappointed Wall Street.

Calling his company "an index fund of pop culture," Mariotti argued that his company's disruptive, passionate ethos and strong retail partnerships would help Funko's business this holiday season.

"We're in a great position inventory-wise with our retail partners, sell-through-wise with our retail partners," the CEO said, adding that Funko is positioned "better year-over-year than we were last year."

"The appetite for our product is amazing on a global basis," he told Cramer. "We're in great position for Q4 and we love what 2019 looks like."

Funko is also exploring opportunities to move its factories out of China, but Mariotti stressed that tariffs aren't the deciding factor.

"We're not really concerned about the tariffs and that's not really our primary decision-making on why we're moving," he said. "We're looking for the best factories that move the fastest, the highest quality, the best price, the most consistent production. It just happens to be a lot of that is working outside of China, and we figure by the end of next year, we should be about 70 percent of our manufacturing should reside outside of China."

Funko's stock closed at $15.67 a share on Friday. Despite the stock's 21-plus-percent decline after earnings, shares are still up more than 135 percent for the year.


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