New York (CNN) Thirty million dollars Funko (FNKO) pop! The figures—those big-headed, vinyl dolls—would soon make their way into the hands of a new collector: the Garbage Collector.
Funko said Fourth quarter earnings report Dwindling demand for toys and excess inventory cause financial problems for the company. Last year, they had to rent excess storage space just to keep their backlog of Funko characters, which range from Baby Yoda to Eddie Van Halen.
Funko was holding $246.4 million worth of dolls at the end of 2022. That’s 48% more than what it held just a year earlier.
The company intends to slightly “eliminate” approximately $250 million in inventory in the first half of 2023 “to reduce implementation costs by managing inventory levels to align with the operating capacity of our distribution center,” Vanko said. in a statement Wednesday. “This is expected to result in writedowns in the first half of 2023 of approximately $30 to $36 million.”
In short, the product they’re hoarding is now worth less than it cost to keep it on hand, so they’re shelling out at least $30 million for it.
On a call with investors last week, CEO Brian Mariotti said Funko had already filled its Arizona distribution center to the brim with dolls and had to rent excess storage containers for them. He said the cost of this extra storage caused the company to lose money quickly.
Company executives also announced that they would cut 10% of their workforce as a cost-saving measure.
Funko has benefited during the pandemic boom, posting $1 billion in net sales for 2021 — up 58% from 2020 — but those gains haven’t held up as the global economy reopens.
The company reported a total loss of $47 million in the fourth quarter of 2022. This is down from a profit of $17 million during the same period a year earlier.
“It was clear on our recent earnings call that our business and operations have reached an inflection point,” Mariotti said. “A combination of macro factors and issues specific to Funko has disrupted our financial and operational performance to an unacceptable degree.”
Funko stock is down 9.4% so far this year.
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