EVERETT — Funko plans to dump more than $30 million worth of its vinyl Pops toys into landfills.
In an earnings report this week, the Everett-based pop culture toymaker said it planned to dispose of thousands of the plastic figurines.
The company’s warehouse in Buckeye, Arizona, is apparently stuffed to the gills, and the toymaker is shelling out big bucks to store them, the gaming review website Kotaku reported. Funko relocated its distribution center from Everett to the Phoenix area last year.
During an investor call this week, “CEO Brian Mariotti said a new distribution center in Arizona was so full that the company has been bleeding cash renting shipping containers to hold all of the excess inventory,” Kotaku reported.
“Inventory at year-end totaled $246.4 million, an increase of 48% compared to a year ago,” the company wrote in a press release.
“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,” the press release said.
Prices for Funko Pops start at about $12, but coveted in-the-box and rare versions can sell for hundreds or even thousands of dollars, collectors say.
Sales of the company’s vinyl dolls and collectibles surged during the pandemic, “spurring a temporary run on Funko Pop! sales. Now that the initial rush has subsided, the company has a ton of extra stock at the same time sales are dropping,” Kotaku said.
Bottom line, tossing them may be cheaper than storing or selling them, Kotaku speculated.
The most likely destination for the unwanted toys, which are made of vinyl, is “a landfill somewhere in Arizona,” according to TheGamer, an online gaming news site. About 90% of new toys are made polyvinyl chloride or PVC, a petroleum product.
CEO Mariotti told investors that the company will try to recycle as many of the toys as possible.
Tom Harrison, the owner of MyMyToy store in Everett, called Funko’s decision “narrow and profit-driven. A better solution, Harrison said, would have been for the company to donate a portion of the stockpile to charity.
“I know of at least two nonprofits in Everett that would love to have Funko products and would benefit. It would be something fun and cool,” said Harrison, whose store carries Funko products. “While Funko is great for our Everett community, I would have loved to have seen them reach out and develop a community-based solution for a portion of these figures. It would not have devalued the product and would have enhanced the company.”
Harrison, a former attorney, said his store at 1806 Hewitt Ave., has struggled to sell its current inventory of Funko Pops.
“There appears to be a significant cooling of demand for Pops created in 2021 and 2022,” he said.
Sales of Funko toys and bobbleheads popped in 2021, and the company racked up over $1 billion in sales, a 58% spike over the previous year.
This week, however, Funko reported a fourth-quarter loss of $42.2 million, after reporting a profit in the same period a year earlier.
The results did not meet Wall Street expectations.
Funko’s headquarters are located in downtown Everett. The company was founded in Snohomish by Mike Becker in 1998. Bobbleheads and coin banks based on retro characters and cereal mascots were among the early products.
In 2005, Becker sold the firm to Mariotti, who expanded the portfolio through licensing deals for popular characters from comics, movies and TV shows. Funko debuted its signature Pop! line of vinyl figures in 2010.
The Associated Press contributed to this report.
Janice Podsada: 425-339-3097; jpodsada@heraldnet.com;
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