This Christmas season has been a rough one for retailers. Constant international supply chain issues, and a slumping Bidencomy, have hit several seasonal mainstays hard; none more so than the toy industry. In an unsurprising move to end the year, Hasbro plans to eliminate approximately 1,100 positions amid continued headwinds in the business.
In a memo to employees, CEO Chris Cocks said while the toymaker has seen some improvements due to a retooled supply chain and improved inventory, the market’s volatility “have proven to be stronger and more persistent than planned.” Hasbro had already laid off about 800 employees earlier this year.
“We anticipated the first three quarters to be challenging, particularly in Toys, where the market is coming off historic, pandemic-driven highs. While we have made some important progress across our organization, the headwinds we saw through the first nine months of the year have continued into Holiday and are likely to persist into 2024,” he also wrote.
These layoffs are expected to deliver gross annual run-rate cost savings of about $100 million for Hasbro leading into the new year.
RELATED: Mark Millar Agrees That Woke Marvel/DC Comic Creators Create Bland Villains
This has been a woeful trend for not just Hasbro, but toy makers in general. During the re-stock season for the holidays, U.S. imports of toys fell by 32% year over year in the three months since August. In dollar terms, according to S&P Global Market Intelligence’s trade data firm Panjiva, that’s a significant decrease in supply, but what about demand?
“There’ll be some money set aside for toys,” said Jerry Storch, chief executive officer of consultancy Storch Advisors and former CEO of Toys-R-Us and Hudson’s Bay Co. “But it’s a reality that there won’t be as many toys sold this year as last year.” Anticipating the lower demand, and already holding surplus inventory, many retailers ordered fewer products than usual this year. That has lead to an overstock on unsold toys filling dollar shops across the country.
The over abundance of unused toys is what seems to keep any sales afloat; all with big slashes in retail price. Discount outlets are swarmed with old stock, and now, a new round of unsold toys could be headed to your local Discount Dave’s after the season is over. The over-saturation and waning interest of outside IPs are a market killer for these toy companies.
One of Hasbro‘s more significant slip-aways was in the IP arena with their selling off of eOne; their fledgling entertainment group. The company sold eOne’s film and TV assets to Lionsgate for $500 million to focus more on its core business; including toy and game sales and some entertainment efforts. Major IPs including Peppa Pig, Transformers, and Dungeons & Dragons brands, which Hasbro retained from eOne, will still be used in a variety of media.
In October, the company reported $1.5 billion in net revenue, down 10 percent year-over-year, and an operating loss of $170 million, after a profit of $194 million a year ago, as strength in the Wizard of the Coast and digital gaming segment was not able to offset softness in the entertainment and consumer products segment.
RELATED: TOP 5 Doctor Who Christmas Specials
Hasbro’s biggest competitor in the market, Mattel, isn’t favoring much better. Despite the huge boost from the Barbie movie this past summer, Mattel’s toy inventory levels at the end of the third quarter declined by a double-digit percentage versus the prior year, with weeks of supply down high single digits, it said last month. Mattel’s implied fourth quarter guidance on toy sales gave a scare to Wall Street also. The company’s third-quarter earnings beat “was largely offset by a weaker-than-expected implied guide” for the fourth quarter, which suggested poor performance for Mattel’s business outside of Barbie products, according to analysts at Citi Research.
There is some who are hoping for a Christmas miracle, though. “We expect to continue to gain share throughout the holiday season,” said Frédérique Tutt, Global Toys Advisor at data firm Circana, formerly NPD. Tutt also said toy sales were down about 7% year-on-year in countries it tracks in the first nine months of the year, but that she expects shoppers to come through in the three weeks before Christmas.
Are you buying toys this Christmas season or are you saving your money for something you can really play with? Leave a comment below!
Leave a Reply