Hasbro faces holiday blues, layoffs, and challenges in the toy market

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In a shocking development, Hasbro, the renowned toy maker, is set to lay off approximately 1,100 employees as it grapples with sluggish sales that have persisted into the crucial holiday shopping season. A company memo revealed the distressing news, sending ripples through the industry.

As of earlier this year, Hasbro boasted a workforce of about 6,300 employees, according to the company’s fact sheet. The announcement comes as a significant blow to the employees and the company, especially considering Hasbro’s previous rounds of layoffs earlier in the year.

The challenges faced by Hasbro are reflective of broader industry trends, with the toy market experiencing a downturn after historic pandemic-driven highs. Hasbro CEO Chris Cocks acknowledged the difficulties, stating in the memo, “We anticipated the first three quarters to be challenging, particularly in Toys, where the market is coming off historic, pandemic-driven highs.”

Despite making some organizational strides, the headwinds encountered in the first nine months of the year have persisted into the holiday season and are expected to continue into 2024. This somber news has translated into a more than 5% drop in Hasbro’s stock in premarket trading on Tuesday morning, with rival Mattel’s stock also experiencing a slip.

Hasbro’s cautionary signals were evident earlier in October when the company warned of impending troubles. In the latest quarterly earnings report, the toy giant revised its already subdued full-year outlook, predicting a staggering 13% to 15% decline in revenue for the year.

The report also disclosed a significant drop in sales for popular toy brands like My Little Pony, Nerf, and Transformer, which fell by 18% due to “softer category trends.” Hasbro’s stock, reflecting these challenges, had plummeted nearly 20% through Monday’s close.

On the flip side, Hasbro’s competitor, Mattel, also foresaw soft sales. However, Mattel’s stock managed to inch up about 6% through Monday, fueled in large part by the box office success of the film “Barbie.” This gain, though positive, still lags behind the 17% growth posted by the S&P 500 so far this year.

The broader retail landscape is also feeling the impact of the subdued holiday season, with lower discounts on toys compared to the previous year. The industry is bracing for a tepid holiday season, and the repercussions of this downturn may extend beyond the immediate future.

As Hasbro and other toy manufacturers navigate these challenging times, the industry’s resilience and ability to adapt to evolving consumer preferences will undoubtedly play a pivotal role in shaping its trajectory. The fate of the toy market remains uncertain, but for now, the holiday season looks set to be a testing ground for both manufacturers and retailers alike.

(Source: CNBC | CNN | WSJ | MarketWatch)

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