Lego looks wobbly after building itself high
COPENHAGEN, Denmark — For Lego, it’s time to break down the blocks and start again.
After building up sales aggressively since a near bankruptcy in 2004 through new ventures like films and new toy lines, the company seems to have hit a peak. Its sales are now falling for the first time in 13 years and it says it needs to simplify its operations.
That means cutting 1,400 jobs, or 8 percent of its global workforce.
The privately held Danish firm said Tuesday that it “now prepares to reset the company,” with a new CEO due to take over in October. more children,” said Chairman Joergen Vig Knudstorp.
Revenue dropped 5 percent in the first six months of the year, to 14.9 billion kroner ($2.4 billion), mainly as a result of weaker demand in key markets like the U.S. and Europe, where sales had risen strongly for years. Profits slipped 3 percent to 3.4 billion kroner ($544 million).
Classic toy lines, such as “Lego City,” did well, as did products associated with “The Lego Batman Movie.”
But revenue in other lines did not do as well, with investments in some new products not yielding the desired benefits.
Analysts said that while the revenue drop was disappointing, it had to come at some point after years of growth.
“You hit a peak,” said Jim Silver, the CEO and editor in chief of toy review site TTPM. “Nothing keeps going up like that.”
“We will build a smaller and less complex organization than we have today, which will simplify our business model in order to reach