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Hasbro Inc. (HAS), a renowned toy manufacturer known for products like Transformers, Dungeons & Dragons, and Monopoly, is set to cut approximately 1,100 jobs, marking a significant workforce reduction of nearly 20%.
This decision comes as the company continues to grapple with persistently weak sales in the critical holiday shopping period.
The cuts, announced by Chief Executive Chris Cocks, add to the 800 layoffs executed earlier this year, a report in The New York Times said. With a workforce of about 6,500 at the end of 2022, this reduction represents a substantial contraction for the company.
The job reductions, expected to be completed within the next 18 to 24 months, are a direct response to weaker-than-anticipated toy sales throughout the first nine months of the year.
According to Cocks, sales had reached "historic, pandemic-driven highs" but have since faltered, with the downturn expected to persist into the next year. The announcement, made just two weeks before Christmas, hits at a time when toy companies typically see their busiest sales period. Nearly half of annual toy sales occur in the weeks leading up to the holiday season, making this period crucial for manufacturers.
The toy industry as a whole has been experiencing a challenging year, with U.S. toy sales dropping 8% through September and a further 10% decline in November compared to the previous year, as reported by the Times citing research firm Circana. Hasbro, in particular, has faced significant setbacks, with the company predicting a sales decline of up to 15% this year after initially forecasting a 3% to 5% decrease. This forecast followed a 10% drop in third-quarter sales, marking Hasbro's fourth-consecutive quarterly loss.
In contrast, Mattel, another major player in the toy industry and maker of Barbie, Hot Wheels, and Polly Pocket, has managed to navigate the downturn more successfully. Boosted by the success of the "Barbie" movie, Mattel broke its sales slump in the latest quarter and expects its 2023 sales to remain on par with 2022, despite the overall decline in the toy industry.
As part of its strategy to address these challenges, Hasbro has focused on returning to its core toy and game business, targeting consumers of all ages. The company also announced plans to sell its eOne film and entertainment business to Lions Gate Entertainment for about $500 million. This move follows Hasbro's earlier initiatives to cut costs across its business, including a previous round of layoffs and the departure of its operating chief.
The layoffs at Hasbro are part of a broader trend of job cuts in various industries as companies seek to boost profits amid challenging economic conditions. Recently, Spotify also announced its intention to lay off 17% of its workforce. For Hasbro, these layoffs are expected to save the company $100 million annually, with severance-related expenses estimated at $40 million. Employees affected by the cuts have been, or will soon be, notified, with the majority of notifications expected within the next six months. Additionally, Hasbro plans to vacate its Providence, R.I., office by January 2025, transferring teams to its Pawtucket, R.I., headquarters.