Hasbro, the toy and game giant that owns Magic: The Gathering and Dungeons and Dragons studio Wizards of the Coast, is slashing another 1,100 jobs as ongoing macroeconomic concerns eat into consumer demand.
The company emailed staff yesterday to say it was cutting 20% of its workforce, on top of 800 job cuts which have already taken place this year. Hasbro owns brands including Monopoly, Transformers, Nerf, Play-Doh, My Little Pony and Peppa Pig, in addition to its Wizard of the Coast operations.
Those cuts are far deeper than Hasbro initially planned. The company began a cost-savings programme in October last year, and in January 2023 confirmed it planned to cut about 1,000 roles, representing 15% of its workforce.
Hasbro CEO Chris Cocks said in the new email, which was seen by the Wall Street Journal and Associated Press, “The market headwinds we anticipated have proven to be stronger and more persistent than planned.
“While we have made some important progress across our organization, the headwinds we saw through the first nine months of the year have continued into holiday and are likely to persist into 2024.”
Hasbro had been hoping for a pick-up in consumer demand across the Christmas holidays period, traditionally a strong quarter for toy and game companies – but the ongoing high-interest rate environment and sticky inflation levels continue to hit consumer spending.
The company separately revealed in a US securities filing that it now expects to deliver gross annual run-rate cost savings of between $350m and $400m by the end of 2025. Annual run-rate is an estimate of yearly revenue based on existing monthly revenue figures.
Hasbro’s most recent quarterly results, released in October, showed net revenues of $1.5bn – down 10% year-on-year and falling short of its expectations.
Wizards of the Coast hugely outperformed in the quarter, however, with revenues spiking 40% thanks to the strength of Magic: The Gathering and Dungeons & Dragons – particularly the “blockbuster” August release of video game Baldur’s Gate III, which last week won Game of the Year at the high-profile Game Awards.
That performance was not enough to offset a malaise in other parts of the business, however, with its consumer products division revenue down 18% in Q3, and its entertainment division seeing revenues fall 42%.
That situation mirrors the huge issues currently being faced by Asmodee owner Embracer Group, which has slashed 900 jobs this year in an attempt to bring down its $1.4bn debt pile.
Embracer’s Q2 financial year results last month confirmed Asmodee as the company’s biggest driver of net sales in the quarter, outstripping the ailing PC and Console games arm as well as the mobile games and entertainment and services units.
Asmodee’s net sales soared 25% in the quarter to just over SEK4bn ($389m), while the PC/console games segment saw net sales fall 5% to about SEK3.9bn ($372m).
More strikingly, Asmodee’s Q2 EBIT – its profitability, minus interest, taxes and some one-off costs – was SEK407m ($39m), up from about $10m year-on-year, while the PC/Console business made a $120.5m EBIT loss in Q2.
But Asmodee has also prepped for a slower-than-usual last quarter of the year, having built up a much lower inventory than usual ahead of its traditional “peak season”.