New York (CNN) worth 30 million dollars Funko (FNKO) Pop! figures — those big-headed dolls of vinyl pop culture — will soon find their way into the hands of a new collector: the Garbage Collector.
Funko said in its fourth-quarter earnings report that a combination of slowing demand for the toys and an excess of inventory is creating financial problems for the company. Last year, they had to rent excess warehouse space just to keep the build of Funko figures, which range from Baby Yoda to Eddie Van Halen.
Funko held about $246.4 million worth of dolls at the end of 2022. That’s 48% more than what they had on hand just a year before.
The company intends to “eliminate” some of the nearly $250 million in inventory in the first half of 2023 “to reduce delivery costs by managing inventory levels to match the operating capacity of our distribution center,” Funko said in a statement Wednesday. “This is expected to result in an impairment charge in the first half of 2023 of approximately $30 to $36 million.”
In short, the product they’re storing is now worth less than the cost of keeping it on hand, so they’re dumping at least $30 million of it.
During a call with investors last week, CEO Brian Mariotti said Funko had already filled its Arizona distribution center to the brim with dolls and was forced to rent excess storage containers for them. The cost of the extra storage space, he said, was causing the company to lose money at a rapid clip.
Company executives also announced they would cut their workforce by 10% as a cost-cutting measure.
Funko benefited from the pandemic boom, posting $1 billion in net sales for 2021 — up 58% from 2020 — but those gains didn’t hold as the global economy reopened.
The company reported an overall loss of $47 million in the fourth quarter of 2022. That’s down from a profit of $17 million in the same period a year earlier.
“It was clear on our last earnings call that the business and our operations were hitting an inflection point,” Mariotti said. “A combination of macro factors and Funko-specific issues have disrupted our financial and operating results to an unacceptable degree.”
Funko shares are down 9.4% so far this year.