Toymaker Hasbro (NYSE:HAS) cut its workforce by 20%, slashing over 1,100 jobs.
It is eliminating offices in Providence, Rhode Island, after seeing sluggish sales persist into the holidays. The company is based in nearby Pawtucket.
HAS stock fell nearly 5% after the announcement. The shares opened at $47.74, a market capitalization of under $6.7 billion.
Bad News is Bad News
Hasbro is best known for its action figures and board games like Monopoly. But it also owns Magic: The Gathering and the Dungeons & Dragons franchise. The company debuted a D&D movie in March that brought in $208 million at the global box office but failed to break even. Hasbro has since sold its movie unit to Lions Gate (NYSE:LGF-A, NYSE:LGF-B) for about $500 million.
CEO Chris Cocks, who tried to return the company to its toy-making roots, said the layoffs would save $100 million but cost $40 million in severance. He said Hasbro expected the first three quarters of 2023 to be “challenging,” with the market coming off pandemic-driven highs. But weak sales are persisting, he added.
HAS stock did well during the pandemic, briefly topping $100 per share. But the end of the acute stage of the pandemic sent people outside. Hasbro sought to prepare for that and laid off 800 workers early this year. A year ago, it had 6,300 employees. Cocks said he expects business weakness to persist into next year.
HAS stock is now down 20% for the year. It’s a contrast to rival Mattel (NYSE:MAT), up 6% for the year on the strength of the Barbie movie. Mattel and Hasbro now have nearly identical market caps, whereas Hasbro’s broader product line had it well ahead a year ago.
HAS Stock: What Happens Next?
Toys are becoming a media business. But media is a business for media people. Hasbro’s effort to manage its own media brands failed. Mattel found success by handing Barbie off to director Greta Gerwig.
As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
