They are not particularly attractive, they are regular on the shelf and, in terms of materials, they are not very far either, but this has not prevented the Funko Pop! have become one of the most prominent phenomena in the current merchandising industry. But, as with any self-respecting stratospheric ascent, it was a matter of experiencing the obligatory fall.
rise and fall
As revealed by Funko in the publication of its financial results for the past fiscal year, net sales of its products increased by 29% compared to the previous year; specifically, they were quantified at 1,300 million dollars. But all that glitters is not gold, since in order to talk about success you have to tell the difference between profit and loss.
It is by taking a look at this statistic that we understand the concern of the company, which experienced a 108% drop in their net income; highlighting the disastrous results of the last quarter of 2022, in which its net sales fell 1% and its net income a whopping 368%. Data that, according to Brian Mariotti, current CEO of Funko, is due to “a combination of macroeconomic factors and problems specific to Funko”.
Of course, these figures will have consequences, starting with an estimated 10% reduction in the workforce. However, the most striking decision of the board involves the destruction of excess inventory that would translate into an estimated amortization of between 30 and 36 million dollars, which would basically be more profitable than the investment required to put it up for sale. all figures in terms of storage and distribution.
This is how the statement in which the maneuver is explained reads:
Inventory at the end of the year totaled $246.4 million, an increase of 48% compared to the prior year. This includes inventory that the Company intends to dispose of in the first half of 2023 to reduce compliance costs by managing inventory levels to align with our distribution center operating capacity. This is expected to result in a writedown in the first half of 2023 of approximately $30 to $36 million.
Probably one of those “specific problems” is related to the overproduction of Funko Pop! figures, which have embraced licenses, franchises and public figures from different fields with obvious differences in appeal to potential consumers. And it is that, for a long time it has not been difficult to find articles that are too “niche” to attract the usual consumer. We’ll see how things end.
Via | ICv2