The saga of Hasbro layoffs is all set to continue into 2024 as the company announces additional jobs cuts as a response to weak sales this year. The Hasbro job cuts appear geared to slash off nearly 15 percent of its current workforce, indicating that 900 employees will now have to look for work. In January, the company had already announced a reduction of 1000 full-time job cuts at Hasbro and according to Reuters, the company has already made progress on this front. With past and upcoming numbers combined, 29 percent of the workforce is set to struggle as a result of the Hasbro layoffs.
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Hasbro, Inc. a Rhode Island-based company, has been in the business of toys since around 1942. The company has built up its reputation by selling some of the most popular toys in the business such as Mr. Potato Head, G.I Joe, and My Little Pony. The news of the layoffs at Hasbro is hard-hitting, both for the company and its customers.
What an ordeal before the holidays. Deepest sympathy to anyone affected by this. Esp. the workforce and their families!
Hasbro to cut 1100 jobs, and closing Providence office. https://t.co/Gi2x08SMqF#Hasbro #hasbrolayoffs #toycommunity pic.twitter.com/4ETxupriJC
— toyhypeusa.com (@toyhypeusacom) December 12, 2023
Hasbro Layoffs—High Inflations Forces Weak Sales Numbers
While the latest inflation numbers are still to come, the inflation rate in the U.S. as of October was 3.2 percent, a decrease from the 3.7 percent rate seen in September, according to the U.S. Bureau of Labor Statistics. The Federal Reserve has a 2 percent annual inflation rate targeted. While we move closer to those numbers, there is still an adverse effect on the purchasing power of many citizens with multiple industries resorting to layoffs, and the number of people cutting down on more frivolous expenses such as toys keeps increasing. The cycle is hard to break out of.
The news of additional layoffs at Hasbro came after a Securities and Exchange Commission (SEC) filing on 11 December, where the company announced the changes it was planning to make to position the business for further growth. The move follows through with their “Operational Excellence Program” that they announced in October 2022, adding that additional organizational restructuring was necessary, highlighting that certain corporate functions would be supported by third-party outsourcing providers in addition to the Hasbro job cuts. The company already set aside $94 million for severance pay and other expenses and believes an additional $40 million will be necessary to cover all costs.
“The Company’s organizational structure changes will result in the reallocation of people and resources, which will include voluntary early retirement for certain groups of employees and additional involuntary reductions in employees (“Additional Actions”). The Company currently anticipates that approximately 900 incremental positions will be eliminated as part of the Additional Actions, which are expected to be substantially completed over the next 18 to 24 months.”
—Hashbro SEC filing
The company’s trading performance in the NYSE was also down around 4 percent while competitor Mattel fell more than 3 percent. Mattel does seem to be doing much better as a result of the success of the recent Barbie movie and the resulting sales but the impact of a slow holiday season is evident nonetheless. The National Retail Federation expected holiday spending to rise by 3 or 4 percent year on year, but the evidence of this has been slow to come. From Black Friday sales revenue to pre-holiday spending, shoppers appear to be adamant about selective spending.
Layoffs at Hasbro Not the Only Cost-Cutting Measure
Apart from the Hasbro job cuts, we also learnt of the company’s decision to sell off its entertainment company, Entertainment One Ltd. or eOne, to Lionsgate in a $500 million deal. Hasbro currently has its eyes fixed on a strategy to develop its priority brands like Peppa Pig, PLAY-DOH, Transformers, and Dungeons and Dragons. This way, the company can focus on their games and products while leaving it to studios to develop the entertainment media content without having to take significant financial risks of their own.
I think the toy industry is facing the same franchise fatigue we are seeing in movies.
Folks like Hasbro are still relying on the exact same toy lines they have had for decades. Kids aren’t going to want Transformers when they don’t want to see the movies anymore.
— Travelling and Trekking 🥾 🛣️🏳️🌈 (@1964haydenj) December 12, 2023
There is also evidence that Hasbro will close down its Providence, Rhode Island office following the end of its lease in January 2025 inviting workers to the Pawtucket branch instead, reporting that the Providence often is not being used to full capacity right now. According to the notice, many affected by the Hasbro layoffs should be finding out about the job cut right now, while others might have to wait for the next 6 months to unfold to learn the fate of their jobs. The company states that they are “offering comprehensive packages including job placement support to assist in their transition” to the affected employees but there is little information available regarding what the packages might include and what forms of support the company is set to offer.
Regardless of the compensation, the Hasbro layoffs are likely to result in a difficult holiday season for most employees either because of a certain job cut or the possibility of an upcoming one over the next 6 months. Those seeing colleagues and team members leaving are also likely to have a difficult time and while we would like for this to be the last round of layoffs we hear about for a while, it does seem unlikely.
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