Christmas Is Not What It Once Was At Hasbro As 1,100 Positions Are To Be Axed Amidst A Dip In Toy Sales

By Brett Hurll

 Hasbro, the renowned producer of Transformers figurines, Dungeons & Dragons, and Monopoly, is set to eliminate approximately 1,100 roles. This decision follows an earlier reduction of 800 positions earlier this year, as communicated by CEO Chris Cocks in a memo to staff, which was subsequently obtained by The Wall Street Journal. As of the close of 2022, Hasbro's workforce numbered around 6,500.

The firm anticipates completing these recent job cuts over the next 18 to 24 months.

Cocks attributed this decision to lower-than-anticipated toy sales throughout the first nine months of the year, following what he described as “historic, pandemic-fuelled peaks.” These challenges have persisted through the festive season and are expected to continue into the forthcoming year.

Cocks noted in the memo, “The market headwinds we foresaw have turned out to be more robust and enduring than we had planned for. While we remain optimistic about Hasbro's future, the present circumstances necessitate further action on our part.”

Hasbro's shares dipped by 4%, while competitor Mattel saw a 3% decrease in after-hours trading. Hasbro's shares have fallen 20% over the year, in contrast to Mattel's 5.4% rise.

This announcement made a mere two weeks before Christmas, arrives as toy manufacturers enter their peak sales period. Analysts suggest that around half of the annual toy sales occur in the weeks leading up to the holiday season, marking a critical phase for these companies.

Preliminary data indicates another challenging year for the sector, following robust sales during the pandemic. According to Circana, a research firm, U.S. toy sales declined by 8% through September. In November, there was a 10% year-on-year fall in toy sales, accompanied by a 7% reduction in the volume of units sold.

Hasbro, in particular, has felt the impact of reduced consumer spending. In October, the company revised its sales forecast, expecting a drop of up to 15% this year, a significant adjustment from the earlier prediction of a 3% to 5% decline. This revision followed the company's report of its fourth consecutive quarterly loss, with a 10% decrease in third-quarter sales.

Conversely, Mattel, known for Barbie, Hot Wheels, and Polly Pocket, has fared better. Boosted by the “Barbie” movie's overwhelming success, Mattel broke its sales slump in the latest quarter. The El Segundo, California-based company expects its 2023 sales to remain level with 2022, despite an anticipated overall decline in the toy industry.

Hasbro CEO Chris Cocks has been steering the company back to its foundational toy and game business, targeting a broader demographic, including adults. The company announced over a year ago its intent to streamline operations to bolster profitability. This announcement was quickly followed by an initial round of layoffs and the departure of Chief Operating Officer Eric Nyman.

Hasbro had earlier revealed plans to divest its eOne film and entertainment division to Lions Gate Entertainment for an estimated $500 million.

Toy manufacturers, including Hasbro, have been grappling with excess inventory and reduced demand, a result of inflationary pressures affecting consumer spending.

Hasbro joins a list of companies implementing job cuts as part of a strategy to enhance profitability. Spotify, for instance, recently disclosed its plan to lay off 17% of its workforce, equating to roughly 1,500 employees, marking its third round of reductions this year.

In a regulatory filing, Hasbro stated that the layoffs are expected to generate annual cost savings of $100 million, with anticipated severance-related expenses of $40 million.

Cocks mentioned in his memo that some affected employees have already been notified or will be within 24 hours, with the majority of notifications occurring over the next six months.

Furthermore, Hasbro plans to vacate its Providence, Rhode Island office when the lease expires in January 2025. Cocks explained that the building is underutilised, and teams will relocate to the company's headquarters in nearby Pawtucket, Rhode Island.