Lego to cut 1,400 jobs as decade-long sales drop
Lego will cut 1,400 of its workforce by the end of this year, the company announced Tuesday.
About 8 percent of the company's 18,200 employees, the job cut comes as the Danish toymaker has seen mid-year revenue fall 5 percent and its profits fall 3 percent, its first drop in sales in more than a decade.
Lego executive chairman Jorgen Vig Knudstorp said the group had become an "increasingly complex organization" following double-digit global growth in the past five years. However, that meant it had "added complexity into the organization" which has presented challenges to growth.
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“This means we will build a smaller and less complex organization than we have today, which will simplify our business model in order to reach more children. It will also impact our costs," Knudstorp said. "Finally, in some markets the reset entails addressing a clean-up of inventories across the entire value chain. The work is well under way.”
While the company witnessed double-digit growth in its market in China during the first half of the year, sales declined in established markets in the United States and Europe.
Knudstorp hinted the company would focus its attention on the brick kits, but without going completely back to basics.
"The brick is the heart of our business and children of all ages love it," Knudstorp said. "We will find more opportunities to engage with kids and parents including innovative ways to blend physical building and digital experiences, such as our successful Lego Life social platform."
Lego sales between January and June stood at $2.38 billion, still leading against its top two competitors, My Little Pony producer Hasbro Inc’s sales of $1.82 billion and Barbie doll maker Mattel Inc’s $1.71 billion.
Copyright 2017 U.S. News & World Report
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