If you heard earlier this year that Funko was planning to destroy millions of dollars of their product then this may not surprise you. After the company revealed that it would be taking a tax write off in 2023 by getting rid of overstock product and dumping it in the trash. How much trash? To the tune of “approximately $30 million to $36 million.” Now this millions of dollars of product is starting to find its way into landfills around the country. Kotoku brings word of this, revealing a video found on Reddit that featured thousands of in-box Funko products going to a dump.
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“It was just ‘a right place, right time’ situation. Our main reason for releasing this video is to showcase corporate wastefulness and greed at the expense of the consumers,” the user that uploaded the video (seen below) told Kotoku. “They were found at a landfill in Washington. They were in fact all sealed product. They all held Funkoverse game product of Nightmare Before Christmas, Aggretsuko, Harry Potter, and Jurassic Park Funkoverse.”
Why did this happen? According to Funko’s own financial statements, net sales increased 29% for the entire fiscal year of 2022, topping out at $1.3 billion; however, their net income decreased 108%. Funko also confirmed that they have a total debt of $245.8 million, a 42% increase compared to the year prior. Like any company with a lot of debt, and not quite as many assets, some cost cutting measures need to happen. On top of that, Funko confirmed that they had a unique problem, notably that they have a lot of inventory sitting in storage and warehouses that is costing them money. Enough money that destroying it would be cheaper than paying to store it, plus there’s the benefit of the tax write-off they get from destroying it.
“Inventory at year-end totaled $246.4 million, an increase of 48% compared to a year ago,” the company said in a statement earlier this month. “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. This is expected to result in a write down in the first half of 2023 of approximately $30 to $36 million.”
In short, Funko made way more product in 2022 than they could actually sell. They do expect revenue growth in 2023 however.
(Cover Photo by Smith Collection/Gado/Getty Images)
