Hasbro Slashes Workforce by 1,900
Hasbro CEO, Chris Cocks, broke the news to employees on Monday, announcing a staggering 1,900 job cuts – adding to the approximate 800 layoffs already this year.
Cox explained that the decision to reduce Hasbro's workforce was made due to the sheer strength and persistence of market challenges, more intense than initially anticipated.
"We anticipate that the first three quarters will present challenges, particularly in the toy sector, where the market is retreating from its all-time highs," Cox stated. "We've indeed made important strides within the organization, but the sustained challenges we experienced in the early months this year have carried on through the summer vacation period and are likely to persist until 2024."
Employees will learn this week if their positions are being terminated, with the remaining layoffs scheduled over the next six months, according to Cox's memo.
Hasbro, renowned for toys like Transformers and games such as Marvel and Dungeons & Dragons, counted 6,300 employees prior to the layoffs, as reported on their website.
Hasbro shares plummeted by over 4% in after-hours trading on Monday following the announcement.
Hasbro revealed job cuts after lowering its full-year earnings forecast in October, the normally lucrative holiday season for toy companies. During the financial results presentation, Hasbro CFO Gina Gott warned of a "broader decline in the toy category."
However, not all toy manufacturers are foreseeing a downturn in this holiday season. Mattel, one of Hasbro's rivals, stated in its latest earnings report that it expects to gain market shares during the fourth quarter and the entire year, thanks in part to the success of the Barbie movie.
Barbie became the highest-grossing film in domestic box offices within weeks of its summer release, grossing over $1 billion. Barbie was distributed by Warner Bros. Discovery Channel.
Job cuts are not the sole step towards cost savings taken by Hasbro: In August, the company announced it would sell its film and TV unit eOne for about $500 million to Lionsgate Pictures.
Hasbro will also downsize its office space and relinquish the Providence, Rhode Island, offices by January 2025, as per the Monday communication.
Insight
Although Hasbro hasn't explicitly stated that workforce reductions drive their current strategy, the company has confirmed that they are part of a broader restructuring plan aimed at enhancing operational efficiency and cutting costs. Here are the key points:
- Workforce Reductions: Hasbro CEO Chris Cocks acknowledged that personnel-related tough moments and decisions have been a part of the company's journey.
- Cost Savings: Hasbro has achieved substantial savings, with gross cost savings of $370 million and net cost savings of $227 million in 2024[4].
- Strategic Plan: Hasbro's new strategic plan "Playing to Win" focuses on profitable growth and operational efficiency, including a $1 billion cost savings program[3][5].
- Business Impact: Despite workforce reductions, Hasbro reported better-than-expected results, with revenue down only 7% excluding eOne's divestiture. The company has also seen growth in its Wizards of the Coast and Digital Gaming segment[1][4].
In conclusion, while workforce reductions are a component of Hasbro's restructuring efforts, they are not the primary objective behind the company's strategy. The primary focus is on cost savings, operational efficiency, and growth initiatives aimed at boosting Hasbro's reach and profitability.
