Funko Inc. (FNKO) revealed its plans to streamline operations by cutting approximately 180 to 200 employees, equivalent to about 12% to 13% of its workforce. The decision, implemented on Thursday, comes as the renowned toy maker grapples with a decline in industry-wide toy demand and strives to optimize its cost structure.
Shifting Focus for Long-Term Success
In an effort to reallocate expenses towards initiatives that offer greater long-term benefits, Funko intends to rebalance its budget. As a result of this restructuring, the company anticipates charges amounting to approximately $2.4 million to $2.8 million, with the majority of these charges expected in the third quarter. Despite the financial impact, Funko foresees substantial annualized run rate cash savings of around $20 million to $22 million. It is worth noting that these figures do not consider potential future hires or additions to the company’s overall expenses.
A Necessary Step Forward
This is not the first time Funko has implemented layoffs this year. Amidst challenging market conditions, Funko recognizes the significance of taking decisive action. Furthermore, Chief Executive Brian Mariotti has decided to take a temporary leave of absence to recharge.
Industry Challenges
The COVID-19 pandemic has significantly impacted toy sales, resulting in a decline following a surge in buying during the pandemic’s peak. Retailers have also become more cautious about restocking toys, further exacerbating the situation. As a consequence of these challenges, Funko’s shares fell by 0.7% after hours.
Funko Inc. remains committed to adapting and strategically aligning itself to navigate these challenging times while optimizing its operational efficiency for sustained success.
