Mattel shares sank on Wednesday as the toy maker cut 2,200 jobs in an effort to cut costs in a weakening toy market. As of this post the stock was down 8 percent in after-hours trading.
The job cuts were known to be coming with the company having announced in Oct. 2017 that it would be seeking to eliminate $650M over two years. The goal currently calls for one-third of that to be achieved in 2018.
Beyond cutting 2,200 jobs – the equivalent of 22 percent of its global non-manufacturing workforce – Mattel has several out plans in motion. The toy manufacturer will be shuttering its New York office, which will impact around 100 employees. It’s also looking to sell several of its manufacturing plants in Mexico.
It has been a rough year for the entire industry thanks to the closure of Toys R’ Us. While there are plans for Party City to try trial its own group of seasonal toy stores, that is only 50 locations and won’t be able to recapture all of that lost Toys R’ us revenue.
This news is almost certain to reignite the rumors of a possible acquisition of Mattel by Hasbro, but we’ll just have to wait and see what happens. It has always seemed preferable for these two titans of the industry to remain separate, but with the current retail climate it may be their only shot at survival.