Funko names a gaming and e-commerce veteran as its new CEO, amid falling sales

By Bill Peters

The move is the latest shakeup at the top for the struggling toy company

Funko Inc. on Thursday said it had appointed gaming and e-commerce veteran Cynthia Williams as its new chief executive, marking yet another change at the top over the past two years as the toy maker tries to find the right leadership combination to navigate an extended stretch of weaker demand.

The company, known for its comic- and movie-themed Funko Pop figurines, announced the change on the same day that it announced mixed first-quarter results. However, it offered a second-quarter outlook that was better than Wall Street expected.

Shares jumped 12.2% after hours on Thursday, following a big drop over the past 12 months.

In Williams, Funko (FNKO) brings aboard a gaming and e-commerce veteran who has worked at Hasbro Inc., Microsoft Corp. and Amazon.com Inc.

Williams' appointment takes effect May 20, and she is set to join Funko's board on that date as well. Michael Lunsford will remain the company's interim chief executive until Williams comes aboard.

Lunsford had been working in the top spot after Brian Mariotti said last July that he would take a leave of absence and stop serving as Funko's chief executive, saying he needed to "recharge." Mariotti had retaken the CEO role near the end of 2022, succeeding Andrew Perlmutter, after an earlier stint as CEO.

"After a thorough and comprehensive search process, we are thrilled to welcome Cynthia as our CEO," Jesse Jacobs, a co-founder at the Chernin Group, which owns around a quarter of Funko's stock, said in a statement on Thursday.

Williams served as president of Hasbro's (HAS) Wizards of the Coast and Gaming division, which includes games like "Dungeons & Dragons," "Magic: The Gathering," and "Monopoly." Hasbro brought Williams on for those roles in 2022. She left the company last month.

Wizards of the Coast over that time has been an area of strength for Hasbro, as enthusiasm for games and toys started to dry up elsewhere. However, some analysts and gamers felt it risked damaging the "Magic" ecosystem by overprinting cards. And the segment risked alienating some game developers via a proposal, later shelved, to make some of them pay royalties.

At Microsoft (MSFT), Williams helped expand Xbox Gaming, Funko said. While at Amazon (AMZN), she helped grow its fulfillment services.

Toy demand has suffered as prices for basic necessities remain elevated - a trend that has endured over the past two years. Retailers, in turn, have been more restrained about what items they bring to their shelves to sell.

Funko, in its earnings release on Thursday, said it was sticking with its sales outlook for the full year. For its second quarter, it forecast sales of $225 million to $240 million, and an adjusted net loss per share of 8 cents to 15 cents. Both were better than what analysts expected.

During the first quarter, Funko reported an adjusted net loss of 17 cents a share, which wasn't as bad as the 30-cent per-share loss expected by analysts polled by FactSet. Sales fell 14% to $215.7 million, missing expectations for $220.3 million.

Lunsford, in that release, said Funko continued to "make progress lowering our inventory levels and paying down debt."

Inventory, or a company's unsold goods, stood at $112.3 million as of March 31, down from $119.5 million at the end of December. Total debt was $246.4 million at the end of March, down from $273.6 million at the end of last year.

-Bill Peters

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05-09-24 1826ET

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