Toy making giant Mattel Inc. (NASDAQ: MAT) is cutting 2,200 jobs, amounting to 22 percent of its non-manufacturing employees worldwide. According to a statement from the company, the cuts have already begun and will continue in the next quarter. The company says that the jobs to be eliminated are mostly back office support positions. Just months ago, the company announced that it would be shuttering its New York office, affecting about 100 employees.
Mattel’s sales have struggled in recent years, as more children began to opt for video games over board games. The toy company announced a cost savings program in October that aimed to reduce costs by $650 million over two years. As part of that initiative, Mattel has already announced plans to sell several of its manufacturing factories in Mexico.
The company has also struggled to regain its footing in the wake of the closure of Toys R Us. Mattel’s chairman and CEO Ynon Kreiz said in a statement, “We are in a turnaround and as expected, had a challenging second quarter driven primarily by the Toys R Us liquidation.” Kreiz told investors that other sellers are filling the void left by Toys R Us and that he believed that the negative impact of Toys R Us’ closure would subside by 2019.
Mattel reported a net loss for the quarter of $240.9 million, or 70 cents per share, considerably larger than the loss of $56.1 million, or 16 cents per share, from a year earlier. The company reported an adjusted loss of 56 cents in earnings per share. That was a much steeper loss than the 30 cents per share analysts had expected, according to Thomson Reuters.
Mattel reported that overall net sales fell 14 percent year over year, falling to $841 million during the second quarter. The results fell short of the $851.8 million analysts had expected. Two of Mattel’s iconic toy lines, Barbie and Hot Wheels, saw sales rise 12 percent and 21 percent respectively in the quarter, but the results suffered from the absence of a big movie tie-in in the three month period. Mattel’s stock price fell nearly 8 percent after the release of the earnings report.