Toy company Hasbro is letting go of around 1,100 employees because they’re having trouble selling toys, especially during the holiday season. The company said that the reductions are on top of 800 job cuts that have been taken so far in 2023 as part of moves announced last year to save up to $300 million annually by 2025. As of year-end 2022, the company said it had 6,490 employees.
The company’s stock dropped by more than 4% in trading after hours on Monday, and Mattel, a rival company, also saw a decline in its stock.
CEO’s Thoughts and Company Struggles
According to the memo from CEO Chris Cocks, they expected the first three quarters of the year to be tough, especially for the toy market, which had unusually high sales during the pandemic. Although they’ve made some progress, the challenges from the first nine months of the year are continuing into the holiday season and are likely to persist into 2024.
Hasbro, a company that had already let go of many employees earlier this year, had indicated in October that it was facing difficulties. In the most recent quarterly earnings report, Hasbro lowered its already not-so-good expectations for the full year, predicting a 13% to 15% decrease in revenue.
Impact on Toy Industry Giants
The sales of popular toy brands had also taken a significant hit, as mentioned in the October quarterly report. Brands like My Little Pony, Nerf, and Transformer had declined by 18% at that time, mainly because of weaker trends in the toy category.
As a result, Hasbro’s stock had dropped by nearly 20% by the end of Monday.
Mattel, a rival of Hasbro, also expressed concerns about slow sales. However, Mattel’s stock has risen by approximately 6% until Monday, largely driven by the successful performance of the movie “Barbie.” Nevertheless, this growth is less than the 17% increase seen in the S&P 500 this year.
The upcoming holiday season might not be very exciting for retailers in general, and toys are being offered to consumers with fewer discounts compared to last year. Moreover, In the first week of Dec Spotify’s CEO, Daniel Ek, announced that the company is letting go of 17% of its employees to reduce costs.
Conclusion
Hasbro is cutting 1,100 jobs due to tough times in selling toys, adding to the 800 job cuts this year. Despite expecting a challenging year, CEO Chris Cocks, Hasbro’s CEO, saw stock drop over 4%. The struggles were hinted at in October, with a 13-15% decrease in yearly revenue projections.
