Why is toy company Hasbro laying off 20% of its employees before Christmas?

The multinational toy company Hasbro has recently reported losses in the third quarter of this year and has announced that it will lay off approximately 1,100 workers, representing around a fifth of its total workforce. The layoffs will affect employees across all of the company’s global locations. This announcement is the second of the year and follows the 800 layoffs that began in early 2023. The company responsible for popular games such as Monopoly has entered a “period of caution” due to financial results that have not met the expectations of company executives and shareholders.

Workers laid off right before the holiday season

According to the filings submitted to the SEC, the leaders of the company have stated that although they have taken measures to increase the profitability of the company, they have encountered “market headwinds” that have been stronger and more persistent than expected. Due to the pandemic, companies’ profits in the games and hobbies sector skyrocketed as people were stuck at home and looking for ways to occupy their time. However, Hasbro has been unable to reach the level of profitability it saw during that period, and now its employees are facing the consequences. The company has already begun to inform the affected workers, and the company plans to wrap up this round of layoffs over the next six months.

Hasbro’s CEO, Chris Cocks, wrote a letter to the SEC stating that they need to ensure a strong and profitable foundation for the company’s growth. He added that workforce reductions are a “last resort” but necessary to keep Hasbro healthy “given the current state of the business.”

Hasbro revenue fell in 2023

The price of toys has begun to come down this year, falling by 7.3 percent compared to the prices captured in November 2022. However, this price decrease has been associated with a ten percent decrease in revenue for Hasboro, one of the reasons the company has announced another round of job cuts. The company’s stock has lost 23 percent of its value over the last six months.

The company had high hopes that the growth in the digital gaming industry would make up for any losses in sales in the Consumer Products market. However, the recent earnings report shows that the company has not met those expectations, with revenue from Consumer Products falling by seventeen percent.

In a recent meeting with shareholders, Cocks mentioned that the company is planning to take the necessary steps to position its portfolio for continued share growth in the new year. They aim to exit the year with momentum for their brands and ensure their inventory health is back to historical norms. Their guidance is based on a cautious outlook, but they are prepared to take advantage of any opportunities.