Hasbro will cut some 1,000 positions, about 15% of its full time global workforce, this year, in an effort to save $250 million to $300 million in annual run rate costs by the end of 2025.
President and Chief Operating Officer Eric Nyman is leaving the company, and its consumer products leadership will report to the CEO, Hasbro also said in a press release Thursday. Nyman was promoted to the post last year when Chris Cocks was named chief executive.
The company also released preliminary quarterly and full-year results. In Q4 revenue fell 17% year over year to about $1.68 billion, with gaming revenue up 22% and consumer products revenue down 26%. For the year, revenue fell 9% to $5.86 billion, with gaming up 3% and consumer products down 10%.
The holiday quarter was “a challenging moment for Hasbro,” Cocks said in a statement.
In the period, Hasbro enjoyed strong growth in its Wizards of the Coast and digital gaming, Hasbro Pulse subscription and licensing businesses, but its consumer products segment underperformed in what he called “a challenging holiday consumer environment.”
Its preview of the quarter’s results isn’t a surprise to investors, who had already lowered their expectations, according to emailed comments from UBS analysts led by Arpine Kocharyan. But Nyman’s departure is unexpected, and a sign that “2023 could be a year of significant uncertainty for Hasbro,” Kocharyan said.
“[I]f the investment thesis for Hasbro was heavily dependent on where Wizard business is headed, today's results highlight that dependence even further,” Kocharyan also said, noting that Hasbro is now likely working with retailers “to balance significant inventory overhang.”
The job cuts are “fairly well spread throughout the organization and mostly focused in the consumer product business and around HAS’s strategy of reducing SKUs,” UBS said, citing conversations with company leadership late Thursday.
These moves are part of a turnaround strategy the company unveiled in early October, which Cocks said “includes a focus on fewer, bigger brands; gaming; digital; and our rapidly growing direct to consumer and licensing businesses.”
The cost of the restructuring is turning out to be more expensive than Hasbro’s earlier estimates, according to UBS. Those analysts said that the company will probably sell the non-Hasbro intellectual property assets that are part of its new eOne entertainment unit, though eOne’s own declines make those prospects questionable, UBS said.
The company in November said it is looking to unload eOne, which it acquired in 2019 for $4 billion.