Funko, renowned for its popular vinyl collectibles inspired by pop culture, has initiated a cost-cutting plan involving various measures. The company has taken steps to reduce its workforce by 12%, alongside other strategic actions aimed at streamlining operations.
One of the notable changes involves a reduction in product offerings due to a surplus of inventory that strained the company’s fulfillment network in the previous year. The excess inventory led to the disposal of approximately $30 million to $36 million worth of products. This incident prompted Funko to reevaluate its product strategy and prioritize operational efficiency.
According to statements by interim CEO Michael Lunsford, Funko has realized the importance of being agile, responsive to pop culture trends, and focused on operational excellence. The company acknowledges that it had expanded its product lines and stock-keeping units (SKUs) rapidly in recent years, resulting in unnecessary complexity and limited returns. As a corrective measure, Funko intends to concentrate its efforts on fewer product lines and SKUs, which is expected to enhance operational efficiency and financial performance.
In addition to the reduction in product offerings, Funko has successfully managed to reduce excess inventory, leading to improved order processing and reduced storage costs. This progress aligns with the company’s commitment to optimizing its supply chain and overall logistics.
The cost-cutting initiatives, which also involve workforce reductions, are projected to result in approximately $38 million in annualized savings. These measures are part of Funko’s comprehensive plan to enhance its financial performance and refocus its business strategy. The company has revised its full-year outlook, expecting lower net sales and adjusted EBITDA for the year. However, Funko aims to rebound and achieve improved financial results by 2024, driven by its strategic realignment and renewed focus on core competencies.
