Hasbro to cut 10% of workforce
Toy maker Hasbro said Friday that its fourth-quarter revenue failed to meet expectations because of weaker-than-expected demand over the holidays. It plans to cut about 10 per cent of its workforce and consolidate facilities to reduce expenses.
The stock dropped 3 per cent Friday.
Pawtucket, R.I.-based Hasbro, whose brands include Monopoly and Nerf, has about 5,500 employees worldwide. A 10 per cent workforce cut would put about 550 people out of work.
While Hasbro said consumer demand was softer than it expected over the holidays, the season was expected to be tough. This was in part because retailers were ordering inventory more cautiously.
In addition, stores such as Wal-Mart, Kmart and Toys R Us beefed up their layaway and reservation services to encourage shoppers to buy toys early in the season, which meant items may have been scarce later on.
The November and December holiday selling period is critical for toy makers because it can make up as much as 40 per cent of their annual revenue.
Spokesman Wayne Charness said that the job cuts will all be this year and will occur globally, with no particular business groups targeted. He said that the facility consolidations could result in some closures but was not specific about which plants would be affected other than to say no closures were planned In Rhode Island or Massachusetts in 2013. Hasbro has offices in 40 countries worldwide.
CEO Brian Goldner said in a statement that Hasbro created a plan during its fourth quarter to deliver $100 million in annual cost savings by 2015.
The company expects charges of about $37 million in 2012 and an additional $20 million to $30 million in estimated charges in 2013 related to its cost-cutting efforts.
Hasbro Inc. anticipates fourth-quarter revenue of about $1.28 billion. Analysts polled by FactSet predicted revenue of $1.4 billion. Unfavourable foreign currency exchange rates lowered results by $8 million.
Goldner said that demand over much of the holiday season was weaker than expected in the U.S. and some international markets.
For 2012, Hasbro expects adjusted earnings between $2.89 and $2.91 per share on revenue of approximately $4.09 billion. Unfavourable foreign currency exchange rates lowered revenue by $99 million.
Wall Street forecast earnings of $2.84 per share on revenue of $4.2 billion.
The company will report its fourth-quarter and full-year financial results on Feb. 7.
Its stock fell $1.14, or 3 per cent, to close at $37.31 Friday. Its shares have traded in a 52-week range of $32 to $39.98.
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