Hasbro Inc. Tuesday outlined a business reshuffling that will include the dismissal of 2,500 workers, but the reorganization should have little effect on the toy maker's Cincinnati operations and 400 workers, a spokesman said.
About Hasbro, Inc.
Business: Maker of toys, including Nerf sports toys, Playskool preschool toys and board games under the Milton Bradley and Parker Brothers names, such as Stratego and Candy Land.
Based: Pautucket, R.I.
CEO: Alan Hassenfeld.
'96 revenue: $3 billion.
'96 profit: $200 million.
52-week high: $31.37 1/2.
52-week low: $22.87 1/2.
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The Pawtucket, R.I.-based company said that in addition to the 20 percent work-force reduction, it will close at least one manufacturing plant - a game factory in New Zealand - and buy back $500 million of its stock. The measures, praised by analysts, are designed to improve competitiveness and the stock price.
Spokesman Wayne Charness said the plans will have "very minimal" effect on the Cincinnati toy-design operation, which involves the boys and Tonka divisions. He said 30 percent of the cuts will be in corporate jobs; the rest will be in manufacturing.
Further, when Hasbro in October announced an extended licensing agreement to make Star War action figures, it said Cincinnati might eventually experience a slight increase in employees as a result.
Of the 2,500 dismissals, roughly 700 are associated with the company's El Paso, Texas, operation, already slated to close. One hundred people work in New Zealand.
"What's important is that what we're doing today is taking steps to make Hasbro more efficient, more competitive and (it) allows us to leverage our global resources," Mr. Charness said.
"This is about ensuring the health of Hasbro for years to come."
Other plant closings are expected to follow. Mr. Charness said there will be announcements in the next few months involving manufacturing sites.
Analysts of the company are calling the move "bold and dramatic" in an industry crowded by more products but not more market share. Hasbro will initially take a $140 million charge in the fourth quarter, but it expects the cutbacks to save it $350 million over the five years. The stock buyback could take three years.
"I think it's a necessary move," said analyst Martin Romm, with Credit Suisse First in Boston. "They're in a very competitive industry, and it's a consolidating industry."
Though Hasbro's sales and earnings have been on the rise, its stock has meandered. Shares rose 9 percent in the past 12 months, compared with 31 percent for Standard & Poor's 500 stock index. Shares rose $1.25 to $31.25 Tuesday.
Asked about the issues that forced the downsizing, Mr. Charness would only say, "We're doing more things, better, smarter, with less people."
But Jim Silver, publisher of The Toy Book, an industry trade publication, said he could see two things that might have motivated the plans.
He estimates that Hasbro's licensing deal with Lucasfilm Ltd. to sell Star War figures cost Hasbro hundreds of millions of dollars.
"Also, outside their boys business, their business has not been great," Mr. Silver said. He said Hasbro's Playskool division this year will slip from the No. 2 spot to No. 3, in revenue.
