Mattel Inc. announced on Wednesday it would slash over 2,200 jobs. The toymaker said that the job cuts represented 22% of its non-manufacturing global workforce. The company let its move be known when it reported second quarter earnings Wednesday that fell short of Wall Street expectations as revenue dropped for the fourth consecutive quarter.
Mattel is the maker of the world famous Barbie doll, and like competitors in the industry, has struggled due to Toys R Us filing bankruptcy and then closing all of its stores. The toy store chain was a key retailer for Mattel and its competitors.
The cuts in jobs start this week and are just one part of a cost-cutting program of $650 million announced in 2017 said CEO Ynon Kreiz, who was named the chief executive in April in the company’s attempt to turnaround the business.
Kreiz said that the layoffs were focused on both back-office as well as support positions. Mattel had close to 28,000 employees on December 31, 2017, shows one of its regulatory filings.
The CEO, who said Mattel has great potential, said a huge discrepancy has been in place between the company’s financial performance the last couple of years and where it really should be.
The toymaker is lagging behind competitors in digital media, say analysts, and is attempting to play catch up with its competitors that have released movies, TV shows and apps.
Kreiz, who in April became the fourth CEO at Mattel in the last four years, is the former CEO and chairman of Maker Studios, which is a digital media firm that Walt Disney Co. acquired.
Mattel shares were down close to 9% during trading afterhours after closing the day’s trade down just 19 cents equal to 1.2%. Through the close of trading on Wednesday, shares of Mattel were up 5.9% on the year.
Mattel also announced, as part of its spending cuts, that it would sell factories it has in Mexico as it had decided to move away from manufacturing its own toys so it is able to spend additional time developing intellectual property.
Sales for Mattel during the second quarter were down 14% ending at $841 million. The adjusted loss reached 56 cents per share, which was higher than projections by analysts on average of 31 cents per share.
Hot Wheels and Barbie were two positives for Mattel during the quarter. Its two largest brands ended with a growth in sales as Hot Wheels’ sales were up 21% and Barbie’s increased by 12%.