The international toy company Hasbro is vacating its Providence office and letting go of 1,100 employees, as announced by CEO Chris Cocks on Monday. The layoffs are particularly challenging during the holiday season, which adds to the 800 jobs cut in January.
Hasbro Layoff
Affected employees will receive notifications about comprehensive packages and job placement support in the next 24 hours, and most layoffs are scheduled over the next six months. Further cuts will take place next year, emphasizing the goal of reducing management layers for a more flexible organization.
Employees in Rhode Island will experience moderate impacts, according to Andrea Snyder, Global Corporate Communications Director. Hasbro has not filed a Worker Adjustment and Retraining Notification (WARN) with the state yet, but it will likely be necessary given the scale of the layoffs. The state's WARN list hasn't seen new layoff notifications since September.
The company plans to improve its organizational model and streamline processes in finance, human resources, information technology, consumer care, and the Global Business Enablement project.
Providence Office Closure, Consolidate in Pawtucket
Hasbro began as Hassenfeld Brothers, Inc., making pencil-box covers and pencils. In 1942, it shifted its focus exclusively to toys. In 1952, Hasbro launched Mr. Potato Head, the first toy advertised on network TV and a significant success, contributing to the company's growth. Hasbro went public in 1968 and acquired Milton Bradley in 1984. While it has moved off the Fortune 500 list, it remains in the Fortune 1000 at position 585.
Hasbro will leave its six-story Providence office on Fountain and Sabin streets, across from the Amica Mutual Pavilion, by January 2025, when the lease ends. This is part of an initiative to reduce the global real estate footprint, as the Providence office wasn't fully utilized. Its staff will be relocated to the Pawtucket headquarters, which is a large one-story brick building on Hasbro Way and Newport Avenue, according to Cocks.
Cost-Cutting Measures
Hasbro's U.S. employees have been given the option to retire early as one of their cost-cutting measures before the recent layoffs. Announced in January, a drop in revenue in the company's fourth quarter of 2022 would result in the dismissal of 1,000 employees, or 15% of the workforce. The company was expected to save between $250 and $300 million annually by the end of 2025. Snyder, however, claims that only 800 people were laid off.
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As 2023 entered, the toy market, which had experienced record highs due to the pandemic, faced ongoing challenges into the holiday season and is anticipated to continue into 2024. Hasbro's CEO, Cocks, emphasized the need to strengthen the company's foundation for growth by modernizing and streamlining the organization. Workforce reductions, while a last resort, are deemed necessary to ensure Hasbro's health, given the business's current state.
In late October, Hasbro and rival toymaker Mattel warned about slow sales leading into the holiday shopping season. Hasbro's third-quarter earnings report showed a 10% decline in revenue, an 18% drop in consumer products, and a 42% decrease in entertainment. Although Hasbro's game-oriented division, Wizards of the Coast, and its digital gaming segment experienced a 40% increase in revenue, it wasn't sufficient to offset the declines in other areas.
What Lies Ahead?
Cocks mentioned that part of the money saved will be used for new systems, insights, analytics, product development, and digital. This includes potential improvements in supply chain efficiency, direct-to-consumer capabilities, and forming partnerships to make the most of licensing opportunities.
In August, the toy company Hasbro sold eOne entertainment, its film and TV business, to Lionsgate for $500 million. As of Monday afternoon, the company stock is at its lowest point in a decade, at $48.76.
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