Why $30 Million Worth of Funkos Are Being Tossed
The company reached a financial rough patch.
Funko is being forced to say goodbye to nearly $30 million worth of figurines.
A decrease in demand for the vinyl toys has caused the company's warehouses to be filled to the brim, forcing the brand to rent storage containers to hold the excess product–making the product worth less than it costs to keep on hand.
By the end of last year, Funkos inventory totaled $246 million worth of product, climbing 48 percent from the year prior.
"This includes inventory that the company intends to eliminate in the first half of 2023 to reduce fulfillment costs by managing inventory levels to align with the operating capacity of our distribution center," Funko said in a press release. "This is expected to result in a write down in the first half of 2023 of approximately $30 to $36 million."
In Q4, the company reported a loss of nearly $47 million, falling from a $17 million profit during the same quarter the previous year, and with that the company has decided to send millions of dollars worth of inventory to a landfill, which sparked some concern on social media.
"so am I hearing it correctly that the CEO of funko pop decided to dump $30 million worth of excess figurines into a landfill rather than like, idk, donate them to kids in hospitals or like idk just put them on clearance?? insane," one Twitter user wrote.
"What the actual Funko - are they actually going to throw $30 million of toys into a landfill? Why not just give them away to kids? Or make them cheaper to buy? I don't have many Pops but this makes me never want to buy one again," another user wrote.
"Somewhere out there, there's an entire landfill that's filled with unsold Conan O'Brien Funko Pops," a third user quipped.
On top of tossing away inventory, the company is also being forced to cut nearly 10% of its workforce to save costs, according to NPR.
"I was a bit surprised because the collectible market is one of the big stories for 2022. Collectibles were up 24%," Juli Lennett, vice president and industry advisor for NPD's U.S. toys practice told the outlet. "That'll include any other types of action figure collectibles as well. But Funko, of course, is the biggest player in that space."
Lennett also noted that the 24 percent increase still was a lot less compared to when the hype of collectibles picked back up in 2020 during the COVID-19 Pandemic, profiting from children ages 12 and up to grown-ups who seek comfort from nostalgia–which accounts for a large fraction of Funkos sales.
Funkos popularity rose after the company partnered with popular franchise properties including Star Wars and Harry Potter. The brand also consistently stays on top of all of the pop culture trends and crazes, including Cocaine Bear, and also offers a wide variety of musicians and athletes.