Stumbling Blocks: Lego to Slash 1,400 Staff, Reset Business as Sales Drop


Stumbling Blocks: Lego to Slash 1,400 Staff, Reset Business as Sales DropCC0 / PixabayBusiness00:37 06.09.2017(updated 03:16 06.09.2017) Get short URL1288


Danish toymaker Lego announced Tuesday it would lay off around 8 percent of its global workforce and revamp its business model following the company’s first slide in sales in 13 years.

Lego’s new CEO is due to take office in October and take on the task of simplifying the business after a decade of double-digit growth and expansion that eventually resulted in an overly complex organization.

With mid-year revenue falling 5 percent to $2.4 billion and profits slipping 3 percent to $544,000, the company is facing its biggest challenge since its near-bankruptcy crisis in the mid-2000s.

“We are disappointed by the decline in revenue in our established markets, and we have taken steps to address this,” said Executive Chairman Jorgen Vig Knudstorp, as cited by Fox Business.

“We have now pressed the reset button for the entire group.”

The company said it would seek a return to a leaner and more efficient organization to address “losing momentum,” admitting that the measure could lead to a period of stagnation or even decline.

Lego said the new simplified business model will help the company reach more kids. Even though it has been embracing new horizons such as video games, movie franchises, robotics, and smartphone applications the physical plastic toy blocks remain key to its identity.

“We’ve been through a decade of very high growth and during those years we have invested a great deal,” Knudstorp said. “What we have unfortunately recently seen is that despite the continued high level of investment, these have not materialized into a good harvest.”

Approximately 1,400 positions will be cut, the majority of them before the end of 2017. The company currently employs 18,200 people.