Lego Cuts 1,400 Jobs To Combat Falling Sales

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Falling sales at plastic building block maker Lego have undermined the foundations of the world’s third largest toy manufacturer.

More than a thousand jobs are set to go as the board ‘resets’ the company’s structure after plans for expansion failed to deliver expected growth.

Danish family-owned business has seen sales fall by 5%, triggering 1,400 job losses worldwide.

Sales dropped to £1.8 billion in the first six months of the year, with profits slipping by 3% to £541 million.

The decline has set Lego back 15 years, when poor performance led the company to teeter on the edge of bankruptcy.

Disappointing decline

The board has identified pouring money into investment to boost production for sales that have not materialised as the issue to rectify.

Lego competes with Mattel and Hasbro in a cut-throat £90 billion global market.

The company has beaten off rivals to maintain market share by delivering consistent double-digit growth for 10 years.

Growth has come from moving into new markets, such as more complicated technical models, video games and Lego films.

Group Chairman, Jorgen Vig Knudstorp said: “We are disappointed by the decline in revenue in our established markets, and we have taken steps to address this.

Pressing the reset button

“We are working closely with our partners and we are confident that we have the long-term potential of reaching more children in our well-established markets in Europe and the United States. We also see strong growth opportunities in growing markets such as China.”

He explained Lego needs to become a “smaller and less complex organisation, which will simplify our business model in order to reach more children and impact our costs.”

“Pressing the reset button is one of two elements of a plan launched by the group,” said Knudstorp.

“The second element is how to return to growth. The group is doing this by exploring adjustments to its successful formula for product development and marketing in order to achieve its ambition to reach more children around the world with Lego play experiences that stimulate playful learning.”

The Lego global workforce of around 18,200 employees will suffer an 8% cut by the end of the year as part of the plans.

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