New York (CNN) Worth thirty million dollars Funko (FNKO) Pop! figures — those big-headed vinyl pop culture dolls — will soon be in the hands of a new collector: the garbage collector.
Funko said in its fourth-quarter earnings report that a combination of declining demand for the toy and excess inventory is causing financial problems for the company. Last year, they had to rent excess warehouse space to hold the pile of Funko figures ranging from Baby Yoda to Eddie Van Halen.
Funko held approximately $246.4 million in dolls at the end of 2022. That’s 48% more than what they had on hand a year earlier.
The company plans to “eliminate” some of that nearly $250 million of inventory in the first half of 2023 to reduce fulfillment costs by managing inventory levels to align with our distribution center’s operating capacity,” Funko said. in a statement Wednesday.”This is expected to result in a write-down in the first half of 2023 of approximately $30 to $36 million.”
Basically, the product they’re storing is now worth less than the cost of keeping it on hand, so they’re dumping at least $30 million of it.
Speaking to investors last week, CEO Brian Mariotti said Funko had already filled its Arizona distribution center with dolls and was forced to rent excess storage containers for them. The cost of that extra storage, he said, caused the company to lose money quickly.
Business leaders also announced they would cut 10% of their workforce as a cost-cutting measure.
Funko benefited during the pandemic boom, posting net sales of $1 billion for 2021 — a 58% increase over 2020 — but those gains didn’t hold up as the global economy picked up again.
The company reported a total loss of $47 million in the fourth quarter of 2022. That’s less than a profit of $17 million in the prior year period.
“At our last earnings call, it was clear that the company and our operations are at a turning point,” said Mariotti. “A combination of macro factors and Funko-specific issues has disrupted our financial and operational performance to an unacceptable degree.”
Funko shares are down 9.4% year to date.
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