For Lego, it’s time to interrupt down the blocks and begin once more.
- Lego to chop 1,four hundred jobs
- Income dropped 5 % ($2.four billion)
- Lego to now ‘reset the corporate’
After build up gross sales aggressively since a close to chapter in 2004 by means of new ventures like movies and new toy strains, the corporate appears to have hit a peak. Its gross sales at the moment are falling for the primary time in thirteen years and it says it must simplify its operations.
Meaning slicing 1,four hundred jobs, or eight % of its international workforce.
The privately held Danish agency stated Tuesday that it “now prepares to reset the corporate,” with a brand new CEO because of take over in October.
“We’ll construct a smaller and fewer complicated group than we now have at this time, which can simplify our enterprise mannequin in an effort to attain extra youngsters,” stated Chairman Joergen Vig Knudstorp.
Income dropped 5 % within the first six months of the yr, to 14.9 billion kroner ($2.four billion), primarily because of weaker demand in key markets just like the U.S. and Europe, the place gross sales had risen strongly for years. Income slipped three % to three.four billion kroner ($544 million).
Basic toy strains, corresponding to “Lego Metropolis,” did nicely, as did merchandise related to “The Lego Batman Film.”
However income in different strains didn’t do as nicely, with investments in some new merchandise not yielding the specified advantages.
Analysts stated that whereas the income drop was disappointing, it needed to come sooner or later after years of progress.
“You hit a peak,” stated Jim Silver, the CEO and editor in chief of toy evaluate website TTPM. “Nothing retains going up like that.”
Silver stated the corporate grew quickly because it launched new merchandise, corresponding to its Lego Buddies line aimed toward women. “The Lego Film,” which was launched three years in the past, helped, too.
Wanting forward, Silver stated Lego has some brilliant spots: Its “Star Wars” units are promoting properly. And a September film based mostly on its “Ninjago” line might have youngsters asking for Legos.
Vig Knudstorp stated the lengthy-time period goal is to get gross sales rising once more in Europe and america and famous there have been robust alternatives “in rising markets reminiscent of China.”
The corporate, he stated, must simplify its enterprise mannequin to scale back prices. Particularly since 2012, the group has been including new companies because it launched into ventures like movies.
“We’ve added complexity into the group which now in flip makes it more durable for us to develop additional,” Vig Knudstorp stated.
He stated that whereas Lego will attempt to interact youngsters and fogeys via on-line merchandise, resembling digital social platforms and coding units, the bodily plastic toy blocks stay key.
“The brick is the guts of our enterprise,” Vig Knudstorp stated.
He informed Denmark’s TV2 station that employees cuts would primarily have an effect on administration and gross sales, not manufacturing.
Final month, the maker of the well-known coloured constructing blocks appointed Niels B. Christiansen, who headed thermostat-maker Danfoss for 9 years, as its chief government to switch interim CEO…