Hasbro officials have just made an alarming announcement pertaining to job cuts. The firm has announced that it is going to lay off 1,000 employees.
It was on Thursday when the officials talked about the earnings for the fourth quarter of 2022. While sharing the grieving news, they reported that they have decided to carry out layoffs.
They will be eliminating around 1,000 employee positions in the upcoming days. They have even intimated to the shareholders that they should not keep their hopes high for the holiday quarter earnings.
Instead, they must be prepared to see weak figures from the holiday quarter, which ended in December 2022.
Following the announcement, the share prices for Hasbro recorded a huge plunge. The Thursday trading session witnessed an over 6% dip in the share prices for the toy maker.
Statement by Chris Cocks
Chris Cocks, the CEO at Hasbro commented on the situation of their company. He revealed that they recorded significant performance and growth in terms of three major segments.
These segments include Hasbro Pulse, Digital Gaming, and the Wizards of the Coast game. Moreover, they witnessed a surge in their licensing business.
The major dip they recorded was with their Consumer Products business. They had hoped that it would perform well like the rest of the segments.
Unfortunately, things did not work out the way they had imagined them to in the first place. They had hoped that the holiday period would be like the rest of the holiday periods in the past.
Turns out, the holiday period proved to be full of challenges due to the consumer market environment. The economy had a major role to play in decreasing consumer demand by a great figure.
The consumer markets have been hit badly due to the market downtrend and the situation is still recovering. It has taken a huge toll on the toy business and Hasbro is paying a huge price for that.
Hasbro to lay off 15% Employees
Hasbro has announced that they will be releasing 15% of their total employees. They will be cutting down on their global workforce and not the force from a particular region.
The 15% layoff means that the company is aiming to cut down 1,000 employees’ employment.
As per the officials, they want to save up on their expenses so they have to cut down on their costs. They have set a target that they want to save around $250 million to $300 million.
They have set the target on an annual basis and they would like to continue with their business model by the end of 2025.
Fourth Quarter Earnings Estimations
Hasbro executives have stated that they are hoping to reach a revenue figure of $1.68 billion for the fourth quarter. Compared to the same quarter from the past year, they have lowered their expectations by 17%.
On the other hand, the analysts at Refinitiv have come up with a higher prediction for revenue. They have estimated that the company may report a revenue worth $1.92 billion for the holiday quarter.
As for the entire year, the company has shared its estimations that they are hoping to hit a revenue of $5.86 billion for 2022. Compared to the past year (2021), the revenue is going to be 9% lower.
Cocks further stated that they have seen many challenges in the year 2022 and have learned from their mistakes.
They want to make things right but it is going to take time. They will have to work on a different strategy where they have to focus on some of their major games and brands.
They have to strengthen their digital footprint and have to come up with ways to grow their licensing and consumer businesses at fast rates.
After the announcement, the company’s shares recorded almost a 6% dip in the trading session.