Hasbro, one of the worlds largest toymakers, said it would cut 15% of its workforce, or about 1,000 jobs, after a disappointing holiday shopping season.
The Pawtucket, Rhode Island-based company also projected it would fall short of fourth-quarter adjusted profit estimates, making $1.29 to $1.31 a share compared to the $1.49 analysts were expecting. Sales for the fourth quarter are expected to be down 17% to $1.68 billion. The cuts will begin in the next few weeks, Hasbro said in a statement Thursday.
Although Hasbros digital gaming business, including the Dungeons & Dragons and Magic the Gathering games, performed well, its traditional toy business faltered. While the pandemic led to a sales boom with parents buying toys for kids stuck at home, demand has cooled more recently.
Despite strong growth in Wizards of the Coast and Digital Gaming, Hasbro Pulse, and our licensing business, our Consumer Products business underperformed in the fourth quarter against the backdrop of a challenging holiday consumer environment, said Chris Cocks, Hasbros chief executive officer.
The company lowered its 2022 revenue forecast at an investor event in October, even as management presented a brighter longer-term future with growth coming from films, games and new online channels. Later than month, rival Mattel Inc., which owns the Barbie and Hot Wheels brands, also lowered its full-year expectations, suggesting high inflation would take a toll on the holiday shopping season.
Changes to its business plan are expected to result in charges of approximately $300 million. In addition, the company is projecting approximately $78 million in charges due to the workforce reduction. As part of the changes, President and Chief Operating Officer Eric Nyman is leaving the company. The consumer products business, which includes G.I. Joe and Potato Head products, will report directly to Cocks.
As part of a restructuring announced in October, Hasbro asked JPMorgan Chase & Co. and Centerview Partners to steer a sale process for most of its Entertainment One film and TV division after a large number of potential buyers came forward.
Hasbro shares fell as much as 9.6% in after-hours trading. The company is due to report its fourth quarter results on Feb. 16.
Learn how to navigate and strengthen trust in your business with The Trust Factor, a weekly newsletter examining what leaders need to succeed. Sign up here.
