Hasbro (NASDAQ:HAS), the creator of popular toys and games such as Transformers, Dungeons & Dragons, and Monopoly, is deepening its workforce cuts in a major operational revamp.
Initially announcing the elimination of approximately 1,000 jobs, or about 15% of its global full-time employees in January 2023, the company is now extending its reduction plans.
Hasbro revealed an additional workforce reduction, aiming to remove around 900 more positions, which are expected to be substantially completed over the next 18 to 24 months, or 20% of its workforce.
Following the announcement, shares dropped more than 5% in pre-market trade on Tuesday. Shares in the peer Mattel (MAT) are down 1.3%.
This move is part of the company's Operational Excellence Program, initiated in October 2022, which includes targeted cost-savings, supply chain transformation, and other restructuring actions to foster growth and enhance shareholder value.
Hasbro has already accrued approximately $94 million in expenses related to the initial job cuts, with an expected additional $40 million for the recent layoffs.
These measures are projected to yield substantial cost savings, with the company now anticipating gross annual run-rate savings of about $350 million to $400 million by the end of 2025, a notable increase from the previous estimate of $250 million to $300 million.
"While there are some renewed concerns about the 2023 guidance, we continue to believe a significant turnaround will be realized in the next two years," analysts at Roth MKM said in a client note.