Lego cuts 1,400 jobs as its sales hit a brick wall
Lego plans to cut 1,400 jobs as the Danish toymaker struggles with weak demand for a new line of 'Batman' play sets that's contributing to its worst downturn in more than a decade.
The company said it would reduce its workforce by 8pc after a decade of rapid expansion more than doubled it to the current level of about 18,200. The move came after Europe's largest toymaker said Tuesday that sales in the first half fell 5pc to €2bn.
"We're losing momentum and we're losing productivity," chairman Jorgen Vig Knudstorp said on a conference call.
"We have built an increasingly complex organization.
"This could ultimately lead to stagnation or decline."
The sales decline and job cuts deepen the Denmark-based company's biggest crisis since 2003 and 2004, when the maker of colourful plastic bricks reported record losses.
After a turnaround led by Knudstorp that turned Lego into the world's most profitable toymaker, sales have slumped anew as children spend more time on digital alternatives, prompting rapid turnover in the executive suite.
Lego, which is controlled by the family of Danish billionaire Kirk Kristiansen, promoted chief operations officer Bali Padda to succeed Knudstorp as CEO as of January 1, but said last month that he'll be replaced on October 1 by Niels B Christiansen, the former boss of Danish engineering giant Danfoss.
Mr Knudstorp yesterday said he's taking responsibility for creating an organization with "too many layers and overlapping functions," so that the company "can't realize its growth potential."