Lego to cut 1,400 jobs as sales slide

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Lego to cut 1,400 jobs as sales slide

Lego to cut 1,400 jobs as sales slide

5 September 2017

In the section Business

Lego headsImage copyright

1,400 jobs is currently cutting at globally in the face of falling sales and profits.

The figure is 8% of the 18,200-strong work force of the company, but it is not clear where the jobs will go.

Lego said in its half-year results that revenue fell 5 percent to 14.9bn Danish krone (#1.8bn, $1.3bn), with earnings down 3% to 4.4bn krone.

The company said it had to make the job cuts as its company had become too complex and needed a “reset”.

Lego chairman Jorgen Vig Knudstorp said the group had become an “increasingly complex organisation” following double-digit worldwide growth in the past five years.

But that meant it had “added complexity into the organisation which now in turn makes it harder for us to grow further”.

Brick heart

The business has been increasing sales in Asia, particularly in new markets.

Lego told the BBC: “In the US and Europe, our sales have declined although we are working hard with our partners to regain momentum.”

Lego said there was double-digit growth in China where there was still “massive upside potential”.

Mr Vig Knudstorp said: “We’re disappointed with the decline in revenue in our established markets, and we have taken steps to address this.”

In addition, it has been diversifying in recent years, most strikingly into a collection of Lego movies, the latest being Batman movies depicted by Lego figures.

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Image caption

Lego chairman Jorgen Vig Knudstorp said the firm had become ‘complex’

Mr Knudstorp suggested the company would be concentrating harder on the brick kits, but without going entirely back to basics: “The brick is the heart of our company and children of all ages love it.

“We’ll find more opportunities to participate with kids and parents including innovative ways to blend physical building and digital experiences, such as our successful Lego Life social platform.”

Lego said Niels Christiansen, a Dane, would replace Briton Bali Padda as chief executive month. He had been at the post for eight months.

Lego has become the world’s biggest toymaker by sales, beating Play-Doh maker Hasbro and Barbie giant Mattel, whose sales are around #1.4bn.

The company said the jobs would go at the year’s end but there would be other support and packages.

Mr Knudstorp explained: “We are very sorry to make changes which might interfere with the lives of many of our colleagues. Unfortunately, it’s essential for us to make these tough decisions.”

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