Toymaker Hasbro announced plans on Monday to cut about 1,100 jobs or 20% of its global workforce, attributing the move to an unexpected sales decline this holiday season that exacerbated the negative impact of high inflation and supply chain disruptions.
Key Details About the Hasbro Layoffs
| Number of Job Cuts | 1,100 (20% of workforce) |
|---|---|
| Primary Location Impacted | Rhode Island headquarters |
| Timeline | Phased through 2025 |
| Reason Provided | Prolonged sales slump |
The widespread layoffs come after the company already eliminated around 800 positions in July 2022. Hasbro’s global headquarters in Pawtucket, Rhode Island will take the biggest hit, with the company planning to close the facility by 2025.
Prolonged Sales Slump Drives Deep Cuts
The decision reflects Hasbro’s ongoing struggles to boost sales in the face of economic headwinds like high inflation and global uncertainty that have dampened consumer spending on discretionary items like toys.
Revenue fell 17% in the third quarter of 2022. “The loss of Toys ‘R’ Us in the U.S. along with the rapid growth of online shopping places pressure on legacy brands like Hasbro to be more nimble while preserving margins,” said James Zahn, senior editor of trade publication The Toy Book.
“We are seeing a very challenging fourth quarter market, with prolonged demand softness impacting revenues,” said Hasbro CEO Chris Cocks.
Rhode Island Headquarters Set to Close
Hasbro has called Rhode Island home for nearly a century, but it announced the Pawtucket HQ will close by 2025 amid this broader business shakeup aimed at cutting costs. Some other U.S. offices will also shutter.
“While this is an extremely difficult decision, we are confident it is the right thing to do for our business,” Cocks said. About half of the 1,100 job cuts will impact the Rhode Island-based team.
What’s Next for Hasbro?
Analysts say Hasbro will likely continue offloading divisions and brands that are underperforming or non-essential. It sold a unit responsible for Peppa Pig and PJ Masks for $3.8 billion last year. Further brand sales could be around the corner.
“There are signs of a recessionary environment forming, which we expect will limit revenue growth in 2020 for most of the toy industry,” said Linda Bolton Weiser of investment research firm D.A. Davidson.
Cost-cutting is also expected to help Hasbro navigate the challenging business conditions in the near term. But the company sees areas primed for growth like Dungeons & Dragons.
“We are very bullish on gaming,” said Cocks. “In gaming, our priority is accelerating our pace of innovation.” Amid the backdrop of cuts, Hasbro aims to continuedeveloping premium gaming experiences.
Hasbro Faces Uphill Climb
While Hasbro makes bold bets in spaces like tabletop gaming, analysts see an uphill battle for sales reacceleration across key brands. High inflation persists and consumers remain wary about prices.
There are also worries that issues like labor strikes and China’s zero-COVID policy could hamper efforts by Hasbro and other toymakers to have robust stock heading into the holidays next year. Shoppers seek deals, posing challenges for player pricing.
“We expect limited top-line growth,” said Jaime Katz of Morningstar. “Price increases generally lag commodity inflation on the way up and down.”
So Hasbro could face further pain before it returns to steady footing. But the company hopes this painful reorganization sets it up better for the long haul.
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