Mattel Inc. has cut about 35% of its non-manufacturing workforce – with more such reductions coming.

The El Segundo toymaker and entertainment company filed a notice with the state employment department on March 17 that it would lay off 120 employees from its El Segundo headquarters. It is eliminating various roles including in marketing, design and information technology. Some of the employees hold positions as managers, directors or vice presidents, who are expected to begin leaving Mattel in May, according to the notice.

Still, in an appearance at the UBS Global Consumer and Retail Conference on March 13, Mattel Chief Executive Ynon Kreiz said that financially the company was in the strongest position it’s been in many years.

“Importantly, we’ve also evolved the company in terms of where it started, where the company used to describe itself as a toy manufacturing company to become what Mattel is today is an IP (intellectual property) company,” Kreiz said. “And from a company that was selling items off a shelf, we’re now managing franchises with global audiences.”

Additionally, he said the company has changed it way of thinking about the people who buy its products “not just as consumers, but as fans that have an emotional relationship with products that we make and experiences that we create,” he said.

This strategy has served Mattel very well in terms of how it infuses brand purpose and controls relevance in everything it does, Kreiz continued.

“And while we reduced our non-manufacturing workforce by over 35%, we’ve cut SKUs (stock keeping units – a scannable code to help vendors track inventory) by more than 35%,” he added.

In the past year, the stock price of Mattel has increased in value by a modest 2%.

The company has seen its shares go up by a slim 36 cents from March 26 of last year when it closed at $19.40 and the closing price of $19.76 on the same date of this year.

In between, the stock price has closed as low as $16.02 on July 9 and as high as $21.94 on Feb. 14.

The share price closed at $19.67 on March 27.

Effect of Trump’s tariffs

Like other toy companies, Mattel faces price increases due to the tariffs implemented on goods from China, Mexico and Canada by President Donald Trump.

Anthony DiSilvestro, Mattel’s chief financial officer, said that Mattel’s teams have been engaged in analyzing and planning for a range of scenarios.

“In terms of the financial impact on Mattel, our 2025 guidance includes the anticipated impact of the new tariffs based on what we know today and mitigating actions we plan to take, including those leveraging the strength of our supply chain and potential pricing,” DiSilvestro said during a conference call in early February with analysts to discuss fourth quarter financials.

Mattel is working to ensure that each of the seven countries where it produces toys and games makes up less than 25% of its global manufacturing by 2027. China currently makes up less than 40%, compared to an industry average of about 80%, according to DiSilvestro. Less than 10% comes from Mexico while no products are made in Canada, he added.

Mattel also plans to decrease its dependency on any one region and plans to close a factory in China by the end of this year, according to a story from Reuters from March 13.

“We used to have four factories that we owned in China. By the end of the year, it will be down to one,” Kreiz told the wire service, referring to a supply chain diversification strategy that started in 2018, the Reuters story said.