In response to a sustained decline in toy sales, Hasbro, the renowned toy and game manufacturer responsible for iconic brands like Transformers and Play-Doh, is implementing a significant workforce reduction. The decision was communicated through a memo from Hasbro CEO Chris Cocks, who announced layoffs affecting nearly 20% of the company’s employees.
Cocks stated that the market challenges were “stronger and more persistent than planned,” leading to the difficult decision to cut 1,100 jobs. This workforce reduction follows an earlier elimination of approximately 800 positions earlier in the year, bringing the total to a substantial 20% of the workforce. The memo shed light on the anticipation of challenging conditions in the first three quarters, particularly in the toy sector, as the market adjusts from historic pandemic-driven highs.
“We anticipated the first three quarters to be challenging, particularly in toys, where the market is coming off historic, pandemic-driven highs,” Cocks remarked. “While we have made some important progress across our organization, the headwinds we saw through the first nine months of the year have continued into Holiday and are likely to persist into 2024.”
The layoffs will be executed over the next six months, with some employees receiving notifications of their job status during the current week. This workforce reduction comes as a response to the persistently challenging market conditions that have impacted Hasbro’s revenue and sales projections.
Before the layoffs, Hasbro boasted a workforce of 6,300 employees, underscoring the magnitude of the restructuring efforts. In the wake of this announcement, Hasbro’s stock experienced a more than 4% decline in after-hours trading on Monday.
The challenges faced by Hasbro are reflected in its decision to revise down its full-year revenue guidance in October, just ahead of the crucial holiday season, traditionally a robust period for toy sales. Hasbro’s Chief Financial Officer Gina Goetter highlighted “broader toy category declines” during the company’s earnings call, signaling the industry-wide impact of changing consumer trends.
Interestingly, not all players in the toy industry are bracing for weakness this holiday season. Competitor Mattel, for instance, expressed optimism in its recent earnings report, attributing its success to the “Barbie” movie. Mattel anticipates gaining market share in the fourth quarter and the full year, showcasing a divergent experience within the industry.
The strategic restructuring at Hasbro is not limited to workforce reduction; in August, the company announced the sale of its eOne film and TV business to Lionsgate for approximately $500 million. Furthermore, the memo revealed that Hasbro plans to reduce its office footprint, with intentions to exit its Providence, Rhode Island, space by the end of the lease term in January 2025.
As Hasbro navigates these challenges, the toy industry as a whole is witnessing shifts in consumer preferences and market dynamics, prompting companies to adapt their strategies to remain resilient in an ever-evolving landscape.
