Toy maker Hasbro is undergoing workforce reductions, laying off approximately 1,100 employees as it grapples with sluggish sales that extend into the holiday season, as outlined in an internal company memo obtained by CNBC. Earlier this year, Hasbro’s workforce stood at around 6,300 employees, according to company records.
Following the news of the layoffs, Hasbro’s shares experienced a more than 4% decline in after-hours trading, and its competitor Mattel also saw a slip in stock value during the same period.
CEO Chris Cocks, in the memo, acknowledged the challenging market conditions, particularly in the toy sector, attributing the difficulties to a decline from the historic highs witnessed during the pandemic. Cocks mentioned that although the company has made progress in various areas, the challenges faced in the first nine months of the year have persisted into the holiday season and are expected to continue into 2024. Toy maker Hasbro
Hasbro had already initiated layoffs earlier in the year and had issued a warning in October about the anticipated challenges. In the most recent quarterly earnings report, the company adjusted its already subdued full-year outlook, forecasting a revenue decline ranging from 13% to 15% for the year.
The report in October also highlighted a significant drop in sales for popular toy brands, such as My Little Pony, Nerf, and Transformers, which had declined by 18% due to “softer category trends.”
As of Monday’s close, Hasbro’s stock had declined by nearly 20%. In contrast, rival company Mattel, despite also warning of soft sales, experienced a 6% increase in its stock value through Monday, buoyed by the success of the film “Barbie” at the box office. However, Mattel’s gains still lagged behind the 17% increase posted by the S&P 500 for the year.
Retailers overall could be in for a tepid holiday season, and toys saw lower discounts for consumers when compared to discounts a year ago.