In a surprise move that has drawn attention in the entire toy industry, Hasbro, one of the top toymakers, said it is cutting 150 workers globally.
The toy giant has cited tariff pressures on the rise and slow demand for its toys as the reason for the layoffs, a major restructuring move.
This is part of a broader strategy to align the company’s operations with its long-term goals. While the reductions are a small percentage of its international staff, the spillover effects could suggest more significant changes within the company.
The Pressure Building on Hasbro
With Chinese import tariffs at record highs, Hasbro has borne the brunt of increased costs and dwindling demand.
Tariffs imposed on toys imported into the country from China over the past few years have taken a beating on Hasbro.
And now, with the increasing cost of doing business, the toy giant has had to downsize, as 150 workers lost their jobs. Is this the first of a company-wide shakeout?
International Reduction in Workforce
The 150 layoffs represent about 3% of Hasbro’s international workforce. The firm, employing an estimated 4,985 people worldwide as of its most recent fiscal 2024 report, is undertaking a strategic effort to rebalance its company with long-term business objectives.
While the extent of the firings, the scope of the employee population overall remains enormous. The reorganization can impact employees at various jobs in various departments, though reports remain low.
A Coping Mechanism against Trade Pressures
Hasbro’s move comes against persisting trade tensions between China and the U.S. The toy company has come under increasing pressure because of increased tariffs on China-imported products.
Half of its games and toys distributed in the U.S. are manufactured in China, so these added expenses have strained its financial performance and necessitated hard choices on cost-saving measures.
Tariffs as a Factor in Hasbro’s Difficulty
The cost of tariffs to Hasbro has been one of the driving forces towards restructuring. President Donald Trump’s trade war with China saw tariffs imposed on goods such as toys, which directly translated to higher costs for Hasbro.
The company has thus had to absorb these increased costs, which directly increased consumer prices and decreased its profit margins.
Hasbro’s Attempts at Adjustment
In response to increasing tariffs, Hasbro has been diversifying its source base and lowering reliance on China.
The company has been accelerating efforts to have toys produced in other countries and re-evaluate production plans.
These are meant to counter the risks of increasing tariffs and allow the company to thrive in the high-stakes global economy.
Weak Demand in the Toy Market
Apart from tariffs, Hasbro is also hurt by weakening demand for its toys. The toy business has struggled, with fewer consumers looking for classic toys.
It has led to a long string of lackluster sales for Hasbro. Hasbro has retaliated by venturing into new territories, including digital and licensed games, to reach younger consumers who might not be as interested in classic playthings.
The Bottom Line Impact on Hasbro
While Hasbro has made changes in its efforts to benefit, the effect of the tariffs and declining demand is felt at the company’s bottom line.
Hasbro CEO Chris Cocks cautioned that the cumulative effect of increased tariffs and softer sales would mean more job cuts and lower profitability.
Hasbro has also been re-examining its manufacturing and logistics ways to stay competitive in the tough market.
Restructuring as a Multi-Year Plan
Layoffs are part of a multi-year restructuring effort that Hasbro is going through. The company is restructuring its business and positioning itself for long-term success, which could include ongoing efforts to cut costs.
These are a part of a larger trend in the business community where companies are being forced to change rapidly based on fluid global economic circumstances, such as tariffs and altered consumer behaviors.
Play-Doh and Other Timeless Brands under Strain
Hasbro’s flagship brands, like Play-Doh, have been cornerstones of the firm’s brand portfolio for decades.
However, as the demand for traditional toys fizzles out, even legendary brand names like Play-Doh no longer remain exempt from the gusts of decelerating demand and inflation.
The company’s failure to keep in touch with changing consumer attitudes led it to re-engineer its product offerings.
The Transition to Licensed and Digital Gaming
Hasbro has been attempting to transition its business model towards licensed and digital gaming. The company’s gaming division has been experiencing massive growth, gaining a new set of consumers for interactive experiences.
Although this transition has been promising, Hasbro is still trying to balance the requirements of its core toy business with creating new gaming experiences.
Additional Layoffs May Be in Store
Though Hasbro has not yet announced additional layoffs, experts are sure that there will be more. With the company still restructuring its operations and conforming to the industry, there are still very high chances of further labor reduction.
The next restructuring will cross various lines of business as Hasbro aims to streamline operations and lower expenses.
The Broader Impact on the Toy Industry
Hasbro’s issues are not unique. The whole toy industry has been experiencing the same challenges over the past few years.
Increased production expenses, changing consumer trends, and competing with digital entertainment make it increasingly difficult for traditional toy manufacturers.
Hasbro’s reaction to these issues will likely establish a model for other industry firms confronting the same challenges.
What’s in the Future for Hasbro?
Moving forward, Hasbro will have to keep pace with the changing global economy. This entails new means of diversifying its supply base, being open to new possibilities for products, and finding its niche within the burgeoning competitive marketplace.
How the company handles these pressures will help shape whether it can recover and thrive in the future.
The Future of the Toy Giant
Hasbro’s future depends on whether it can respond to external pressures such as tariffs, changing consumer behavior, and the increasing digital landscape.
Focusing more on reorganization and diversification, the company hopes to position itself in a changing market.
The next few years will nevertheless determine if Hasbro will continue as a leader in the toy industry or not.
Discover more DIY hacks and style inspo- Follow us to keep the glow-up coming to your feed!
Love content like this? Tap Follow at the top of the page to stay in the loop with the latest beauty trends, DIY tips, and style inspo. Don’t forget to share your thoughts in the comments — we love hearing from you!