Rising Costs Affect Profits & Returns Although JAKKS Pacific's initiatives to boost sales — including the launch of products — and the shift toward more technology-driven toys to revive its brands would aid profits in the long term; costs related to those would hurt the company in the near term. In the second quarter, gross margin was 26.4%, down 180 basis points (bps) from the prior-year quarter. The metric was negatively impacted by rise in sales reserves and lower selling prices for certain licensed products at the end of the reporting cycle.