Funko, the company behind Funko Pop! – those vinyl figurines with big bobbly heads, has recently announced its plans to bin $30 million worth of stock.
Profits at the end of 2022 were waning as demand for the toys slowed and a huge surplus of inventory meant that the firm was paying more to store the product than they could earn by selling it!
Not only is the company throwing away stock, but they are also looking to cut their workforce by 10% in an attempt to bring down costs.
Funko saw a boom in demand during the pandemic, reporting $1 billion in net sales for 2021. As the global economy reopened though, being locked in your home with collectible figurines was no longer necessary, and sales have dropped significantly. The firm made a loss of $47 million in Q4 of 2022 and hence are doing anything possible to claw back some cash.
Funko Pop! was first introduced in 2010 and has since grown into a massive franchise with thousands of different figures available, including characters from popular franchises such as Star Wars, Marvel, DC Comics, Harry Potter, and many others.
The popularity of Funko Pop! is due to its extensive range of characters and the unique designs of the figurines, making them highly collectible and appealing to fans of all ages.
THINK LIKE AN ECONOMIST!
Q1. Explain why Funko Pop! is willing to bin $30 million worth of stock.
Q2. Explain why this is an example of a sunk cost.
Q3. Analyse two other methods Funko could implement to reduce costs and return to profitability.
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