If there is a single word to describe the current state of business in the COVID-19 era, it just might be “uncertainty.”
In an effort to enhance its financial flexibility for the time being, Funko will furlough “a significant portion” of its employees beginning on April 5. The company is also implementing salary reductions across its executive team and upper-level management while working to execute reductions in operating expenses and non-product development capital expenditures.
“During this uncertain and unprecedented time, it is essential we take actions to best position Funko for our employees, partners, and shareholders,” says Funko CEO Brian Mariotti. “We are making difficult decisions that we believe will put us in a position of strength to navigate this crisis and support the long-term health of our company.”
Additional moves include proactively managing working capital and reducing incoming inventory to align with sales forecasts.
Despite last year’s challenging retail environment and a rough fourth quarter, Funko delivered some big numbers, including a 16% sales increase for the year. Last month, the company joined many others in withdrawing its full-year guidance due to the spread of COVID-19 as it moved to a remote workforce.
Traditionally, Funko does a lot of its business by engaging with consumers directly at live events such as Comic-Con International: San Diego (SDCC) and New York Comic Con (NYCC). The live event and convention business has been entirely derailed by COVID-19, and for Funko the hit was immediate due to the postponement of last month’s Emerald City Comic Con (ECCC). The company was set to debut a host of exclusive merchandise at the event, some of which it was able to sell online during a virtual fan event.
Moving forward, Funko says that it’s evaluating further options to increase flexibility and retain liquidity. Furloughed employees will maintain their health benefits, and subject to local regulations, be eligible to receive unemployment benefits.
The Toy Book continues to monitor developments regarding COVID-19 and its impact on the toy industry here.