Shares in toy company Funtastic (FUN) fell by as much as 37% today after the company announced that its earnings before interest and tax (ebit) have been revised down to between $28 and $31 million from an earlier guidance of $43 million.
"The principal reasons for the revised outlook are the lower than expected margins in our Toy businesses and lower than expected last quarter sales," said the company in a statement.
"This is as a result of higher than expected sale of low margin excess inventory and additional resulting rebates associated with those sales."
However, Funtastic said that it anticipates its Madman business to exceed expectations, while its Judius operation will meet internal forecasts for the 2007 financial year.
The company added these internal forecasts are important for its 2008 financial year outlook.
The board said it would immediately be commencing a strategic review of the business.
In terms of debt, the company expects to finish the period with lower net bank debt than the previous year due to improved operating cash flow.
Funtastic said it expects its US operations to contribute towards profitability in FY08 and expects to ship its first inventory to ABC Learning Centres in the US before December 2007.
Funtastic fell by 43.5 cents today to close down at 74.5 cents.
