Funko, maker of the popular Funko Pop! It is not going through its best moment. The financial results corresponding to the last fiscal year have exhibited not very encouraging numberswhich has forced the company to announce a series of drastic measures to continue standing and try to satisfy its investors.
The most striking movement announced by the board of directors to respond to this situation involves the destruction of a significant part of its inventory. The company has accumulated millions of figures in its warehouses, but these have not been sold. In this sense, as they explain, it is more convenient to get rid of them than to try to sell them.
Funko will destroy its excess inventory
An interesting fact revealed by Funko’s balance sheets is that the inventory, as of December 31, 2022, increased 48% compared to the previous year and reached a valuation of 246.4 million dollars. We don’t know why the company’s products that are usually quite popular are not selling at the rate that projections demand.
From KotakuHowever, they presume that a large part of this inventory is made up of less attractive figures for consumers. In the warehouses there are many figures in the style of Machine Gun Kelly, Spider-Man and Pikachu, instead of the popular Grogu from ‘The Mandalorian’, I Am Iron Man, Captain America with Mjolnir and Willy Wonka.
In any case, the company is determined to put an end to that problem. The destruction of excess inventory should be converted into a write-down of between 30 and 36 million dollarsa huge amount of money that would translate into the expenses necessary to store, promote and distribute the figures that will not finally reach the market.
Since ICv2 point that Funko executives have also given the green light to proceed with a 10% reduction in the workforce, another drastic maneuver that would help to clean up the finances of the American company in these times of crisis. In this sense, let’s take a closer look at their numbers to try to better understand this phenomenon.
In the last quarter of 2022, the company recorded an interesting 29% increase in its net sales ($1.3 billion). Up to this point we could say that things were going well in Funko’s balance sheet, but we must add a very important piece of information to the equation: in the same period, operating expenses grew by 78% compared to 2021.
The company needed 139.2 million dollars in the fourth quarter to maintain its operation. This amount of money, added to a growth in its debt of 42% compared to the levels of the previous year, caused the losses to amount to 46.7 million dollars. Overall, his balance sheet was not really good.
How did we come to all this? According to Brian Mariotti, Brian Mariotti, the company’s current CEO, recently had “a combination of macroeconomic factors and specific problems” that led to the current situation. We have to wait to find out if these movements are effective and the company manages to continue on its way.
Images: Nathalia Arantes
