Hasbro plans to eliminate 1,100 additional jobs

Hasbro plans to cut approximately 1,100 jobs amid continued headwinds in the toy business.

In a memo to employees, CEO Chris Cocks said that while the toy maker has seen some improvements due to a restructured supply chain and improved inventory, market headwinds “have proven stronger and more persistent.” than planned.” The company had already laid off about 800 employees earlier this year.

“We anticipated the first three quarters would be challenging, particularly in toys, where the market is coming off pandemic-driven all-time highs. While we have made some important progress across our organization, the headwinds we saw during the first nine months of the year continued into the holidays and are likely to persist into 2024,” he wrote.

The company accrued about $94 million in expenses related to the initial layoffs and expects to accrue $40 million in incremental severance expenses related to the latest layoffs. These layoffs are expected to generate gross annual cost savings of around $100 million.

The company also sold eOne’s film and television assets to Lionsgate for $500 million to focus more on its core business.

That business includes sales of toys and games, as well as some entertainment efforts, including the popular Peppa Pig, Transformers and Dungeons & Dragons brands, which it retained from eOne. Entertainment projects that included transformers one with Paramount, an animated Magic: The Gathering series with Netflix and a new YouTube series, starting in October.

In October, the company reported $1.5 billion in net income, 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 Wizard of the Coast and digital games. The segment was unable to offset weakness in the entertainment and consumer products segment.

Full note:

Equipment,

A year ago, we unveiled our strategy to focus on building fewer, bigger, better brands and began the process of transforming Hasbro. Since then, we have made some important achievements, including restructuring our supply chain, improving our inventory position, reducing costs and reinvesting more than $200 million in the business while increasing share in many of our categories. But the market headwinds we anticipated have proven to be stronger and more persistent than planned. While we are confident in Hasbro’s future, the current environment demands that we do more, even if these decisions are some of the most difficult we have to make.

Today we are announcing additional staff reductions as part of our previously communicated strategic transformation, affecting approximately 1,100 colleagues globally, in addition to the approximately 800 reductions already made.

Our leadership team made this difficult decision after much deliberation. We recognize that this is serious news that affects the livelihoods of our friends and colleagues. Our approach is to communicate with each of you transparently and support you during this period of change. I want to start by addressing why we’re doing this now and what’s next.

Because right now?

We enter 2023 expecting a year of change that would include significant updates to our leadership team, structure and scope of operations. We anticipate the first three quarters will be challenging, particularly in toys, where the market is coming off pandemic-driven all-time highs. While we have made some important progress across our organization, the headwinds we saw during the first nine months of the year continued into the holidays and are likely to persist into 2024.

To position Hasbro for growth, we must first ensure our foundation is strong and profitable. To achieve this, we need to modernize our organization and become even more efficient. While we view staff reductions as a last resort, given the state of our business, it is a lever we must use to keep Hasbro healthy.

What happens next?

While we are making changes across the organization, some functional areas will be more impacted than others. Many of those whose roles are affected have been or will be informed in the next 24 hours, although timings will vary by country, in accordance with local regulations and subject to consultation with employees where necessary. This includes team members who raised their hands to resign from their roles at the end of the year as part of our Voluntary Early Retirement Program (VRP) in the US. We are immensely grateful to these colleagues for their many years of dedication . and we wish them all the best.

The majority of notifications will occur over the next six months, with the remainder occurring over the next year as we address the remaining work on our organizational model. This includes standardizing processes within Finance, HR, IT and Customer Service as part of our Global Business Enablement project, but it also means working harder across the business to minimize management layers and create a more agile organization.

What else are we doing?

I know this news is especially difficult during the holiday season. We value each of our team members: they are not just employees, they are friends and colleagues. We decided to communicate now so people have time to plan and process the changes. For affected employees, we are offering comprehensive packages including job placement support to assist in their transition.

We have also done everything we can to minimize the scale of the impact, such as launching the VRP and exploring options to reduce our global real estate footprint. On that note, our Providence, Rhode Island office is not currently being used at full capacity and we have decided to exit the space at the end of the lease term in January 2025. Over the next year, we will welcome teams from our Providence office to our headquarters in Pawtucket, Rhode Island. It’s an opportunity to reshape the way we work and ensure our workspace is vibrant and productive, while reflecting our most flexible in-person cadence since the pandemic.

Looking to the future

As Gina often says, cost reduction is not a strategy. We know this and that is why we will continue to grow and invest in various areas in 2024.

As we discover more cost savings, we will invest in new systems, insights and analytics, product development and digital, all while strengthening our leading franchises and ensuring our brands have the essential marketing they need to thrive in the future.

We will also leverage unlocked potential across our business, such as our new supply chain efficiencies, direct-to-consumer capabilities and key partnerships to maximize licensing opportunities, scale entertainment and free up our own content dollars to drive development of new brands. .

I know there is no hiding how difficult this is, especially for the employees directly affected. We thank you for your contributions and wish you all the best. In the coming weeks, let’s support each other and support each other in driving these necessary changes, so we can grow our business again and carry out Hasbro’s mission.

Thanks, Chris