Funko Pop toys were once a sought after collectible in the U.S., but a sharp plunge in their value has the company sending the figurines to the trash heap.
Demand for the toys has tumbled so much that parent company Funko said it plans to "eliminate" between $30 million and $36 million worth of the vinyl figurines. Funko said it will trash its overstock of collectibles during the first half of this year.
Funko did not immediately respond Monday to a request for comment. In its most recent earnings report, the company said inventory totaled $246.4 million at the end of 2022, up 48% from 2021. Steve Nave, Funko's chief operating officer, explained last week how company officials decided to throw out excess inventory.
"We went after the oldest inventory first," he said during a conference call last week with analysts and investors. "Again, inventory that we felt like we could sell over time, but due to the operational constraints, it's just better to get out of it."
Excess toys will be destroyed
CEO Brian Mariotti said in last week's conference call that Funko keeps its excess inventory in a rented warehouse in Arizona and holding so many Funko Pops is "restricting our distribution centers throughout and incurring incremental container rental charges." Funko will use a third-party based in Arizona to destroy the collectibles, Nave said in the earnings call.
Funko is a Washington-based company that focuses on nostalgia toys. It opened in 1998, went public in 2017, and now employs 1,466 across Asia, Europe and North America. The company also sells backpacks, board games, books, non-fungible tokens and wallets.
Known for their short stature, big block heads and wide eyes, Funko Pop toys depict some of the most iconic figures in pop culture — from Star Wars characters and professional athletes to actors and wrestlers. Funko began selling the figurines in 2010 and they generated a loyal customer following in subsequent years. Their popularity grew even stronger on the secondary market as rare collectibles resold for tens of thousands of dollars.
But recent history hasn't been so kind to Funko. Company debt grew to $245.8 million at the end of 2022, up 42% from the year prior. Meanwhile, sales in its core collectibles category dropped 6.6% between 2021 and 2022, according to company data. Funko reported its profit fell 108% to $5.2 million in 2022 compared to the year prior.
Funko's stock price fell 1.1% on Monday, trading at $9.75 a share.
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