Why is toy giant Hasbro laying off massive workforce?

Toy manufacturer Hasbro is set to cut nearly 20% of its workforce, amounting to approximately 1,100 jobs, citing a persistent and stronger-than-anticipated sales decline during the crucial holiday shopping season. 

CEO Chris Cocks revealed the decision in a memo to employees, acknowledging: "The market headwinds we anticipated have proven to be stronger and more persistent than planned."

The company, renowned for franchises like Dungeons & Dragons and Transformers, faces challenges in overcoming a post-pandemic dip in sales. 

Although parents increased toy purchases during pandemic-related lockdowns, the trend has since reversed, leading to a projected 19% decline in sales for this quarter. 

Following the announcement, Hasbro's shares initially dropped by 8.7% in extended trading but showed signs of recovery.

The job cuts are part of a cost-saving strategy, expected to result in annual savings of $100 million. Simultaneously, the company anticipates costs of around $134 million, covering expenses like severance. 

In a bid to adapt to industry conditions, Hasbro, along with rival Mattel Inc., is focusing on transforming its toy business into entertainment properties. 

This involves bringing iconic brands like Dungeons & Dragons and Barbie to the big screen. Additionally, Hasbro disclosed plans not to renew a lease on an office building in Providence, Rhode Island, relocating employees to its nearby headquarters in Pawtucket by January 2025. 

The company had previously lowered its annual revenue forecast in October due to a softer toy market heading into the holiday season.