Fisher-Price has laid off 50 employees at its East Aurora headquarters as part of a wider layoff at its parent company, Mattel.
Back-office workers were primarily affected by the job eliminations, which were described as a cost-cutting measure by Mattel spokesperson Alex Clark. The cuts will allow the company to focus its resources on more "business-critical" areas, such as design and development, franchise management and commerce, he said.
"This reduction is an important step in ongoing strategy to streamline our operations and improve profitability, while eliminating at least $650 million in net costs," Clark said in an email.
Mattel cut 2,200 jobs globally, accounting for 22 percent of its workforce not including manufacturing. It will also close all of its factories in Mexico.
The struggling toy company saw an 11 percent decline in sales from April to June. It placed much of the blame for its poor quarterly earnings on the bankruptcy and closure of Toys R Us stores, one of its biggest customers. The toy retailer owed Mattel $136 million, according to court filings.
In a statement to investors, Ynon Kreiz, chairman and CEO of Mattel, noted "a big discrepancy between our financial performance over the last few years and where the company should be".
"While the industry is evolving, the toy market continues to grow, and we should be able to reverse our own trends given our strong standing and the quality of our assets," he said. "With that said, we are in a turnaround and as expected, had a challenging second quarter driven primarily by the Toys R Us liquidation."
But even without the Toys R Us impact, sales would have remained flat, the company said.Mattel's profit margins fell, too, from 41 percent to 30 percent, as rising oil prices increased the cost of materials. Sales also declined in China. Mattel had already seen sales decline for three straight quarters before releasing its June results, which encompassed the closure of Toys R Us's 800 stores.
The company's second-quarter earnings results showed sales of its two most iconic properties performed well: Barbie sales were up 12 percent from the same period last year, while Hot Wheels grew by 21 percent in the same time period.
But Fisher-Price's performance fell short. Worldwide gross sales of Fisher-Price and Thomas & Friends were down 14 percent year over year, which it attributed primarily to Fisher-Price infant products and Thomas & Friends Products.
According to the last available count, Fisher-Price employed 770 people. Its workforce was much larger before it was bought by Mattel in 1993. Mattel immediately cut about 100 “redundant” corporate positions. In 1995, it trimmed an additional 700 employees from its Medina factory before closing it for good in 1997. In 2013, Mattel consolidated certain operations to Mattel’s North America Division in El Segundo, Calif. That move resulted in the loss of 100 workers in East Aurora.
Still, the workforce in East Aurora had been shrinking even before the company’s sale. By 1991, Fisher-Price had cut its 3,400-person workforce in half. The company lost another 450 workers when it closed its East Aurora toy-making operations, 720 when it closed its Holland manufacturing site and 250 more when it cut back at its Medina plant. An additional 170 jobs were shed at the East Aurora headquarters. Those closures were a result of Mattel and Fisher-Price moving toy manufacturing to plants in Mexico and China.
Mattel had $4.9 billion in sales last year. It's the second-largest toy maker after Lego.