Economy

Lego cuts 1400 jobs as its sales hit a brick wall

Lego cuts 1400 jobs as its sales hit a brick wall”

Lego Group chairman Jorgen Vig Knudstorp said: "We are very sorry to make changes which may interfere with the lives of many of our colleagues".

Over the past dozen years, Lego A/S has snapped together sales growth with construction sets ranging from Elsa's sparkling ice castle to the "Star Wars" Imperial Assault Hovertank - as if game consoles and smartphones had never invaded the playroom.

Revenue in the first half fell 5% to 14.9bn Danish krone as weaker demand in the group's established markets of the U.S. and parts of Europe offset double-digit percentage growth in China.

A Lego spokesperson declined to comment on where the jobs would be cut, but the company said a majority of the 1,400 positions will be gone before the end of the year.

One of the great turnaround stories of the past decade has come unravelled as today Denmark's Lego announced a decline in revenues and plans to eliminate 1,400 jobs.

Despite the growth in China, Lego still saw an unexpected drop in results. Profits slipped 3 percent to 3.4 billion kroner ($544 million).

Lego now employs around 900 staff in the UK.

The company, he said, needs to simplify its business model to reduce costs.

"The Lego Batman Movie", an animated film featuring the superhero and the company's bricks, hasn't generated the sales of spinoff merchandise that Toys R Us or Lego expected, he said.

Lego admitted that the organisation had become too complex over the past five years, due to its rapid expansion, to support future global growth.

"In the process, we have added complexity into the organization which now in turn makes it harder for us to grow further", Knudstorp explained.

Knudstorp said: "We believe our most important contribution to society is through creative LEGO play experiences, as play is critical for children's learning and development". Christiansen will start October 1.

According to their most recent press release, the LEGO Group's revenue for the first half of 2017 is 5 percent down compared with the same period in 2016.



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