Mattel shares have dropped more than 8% after the toy manufacturer said it would cut 2,200 jobs, representing 22% of its global non-manufacturing workforce. The job cuts come just months after the company closed its New York office, which affected about 100 employees.
The move might form part of the cost savings program Mattel launched in October – the company plans to eliminate $650 million in costs over two years. As part of the initiative, the company also plans to sell several manufacturing factories in Mexico.
The demise of Toys ‘R Us, the toymaker’s biggest customer, has decreased Mattel’s sales by 10%, according to its Q2 earnings report. For the second quarter of 2018, net sales took a 14% tumble to $841 million, while gross sales went down 11%. The reported operating loss was $189.2 million, and adjusted operating loss was $141.3 million.
“Mattel is a company with great potential. We see a lot of opportunities, but there has been a big discrepancy between our financial performance over the last few years and where the company should be,” said Ynon Kreiz, Chairman and CEO of Mattel, in a statement. “While the industry is evolving, the toy market continues to grow, and we should be able to reverse our own trends given our strong standing and the quality of our assets. With that said, we are in a turnaround and as expected, had a challenging second quarter driven primarily by the Toys ‘R’ Us liquidation. At the same time, we saw continued strong performance by Barbie and Hot Wheels, and we made substantial progress on our Structural Simplification program to restore profitability and improve productivity in the near-term.”