Introduction:
Toymaker Hasbro has announced a second wave of workforce reductions, planning to cut an additional 900 employees globally almost a year after revealing intentions to slash 15% of its staff due to sluggish sales.
Job Reduction Plans:
Originally disclosing plans to eliminate around 1,000 full-time positions in January, Hasbro had already implemented 800 job cuts by the recent announcement. According to regulatory filings at the end of 2022, the company had a global workforce of approximately 6,490 people.
The total layoffs now amount to 1,900, constituting 29% of Hasbro’s workforce. In response to this news, Hasbro’s shares fell approximately 6% in extended trading, with competitor Mattel also slipping more than 1%.
Market Challenges:
In an email to employees, CEO Chris Cocks acknowledged that the market challenges the company anticipated have proven to be more formidable and enduring than initially planned. Global consumers facing persistent inflationary pressures have curtailed discretionary spending, directly impacting toy sales.
Both Hasbro and rival Mattel had previously cautioned about a subdued holiday season, with consumers adopting more frugal spending habits. Cocks noted that challenges experienced in the first nine months of the year have extended into the holiday season and are likely to persist into 2024.
Timeline and Cost Savings:
The job notifications for the majority of employees are expected to occur over the next six months, with the remaining balance taking place over the following year. Additionally, Hasbro revealed plans to exit its Providence, Rhode Island office by January 2025, citing underutilization.
Despite the challenges, Hasbro now anticipates achieving gross annual run-rate cost savings ranging from $350 million to $400 million by the end of 2025. This is an increase from the previous estimate of $250 million to $300 million, reflecting the company’s efforts to navigate a changing market landscape.
Nithin Rosh