COPENHAGEN, Denmark — Danish toy maker LEGO said it will cut 1,400 jobs, or about eight percent of its global workforce, after reporting a decline in sales and profits in the first half of 2017.
The privately held company said Tuesday that its revenue dropped 5 percent – $2.4 billion. Profits slipped 3 percent – 544,000. It said it “now prepares to reset the company.”
Last month, the maker of the famous colored building blocks appointed Niels B. Christiansen, who headed thermostat-maker Danfoss for nine years, as its chief executive to replace interim British CEO Bali Padda.
Based in western Denmark, LEGO’s North American Headquarters resides in Enfield Connecticut.
In a release, LEGO 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.
“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.”.
During the past five years, the LEGO Group has built an increasingly complex organization to support global double-digit growth.
Knudstorp said “in the process, we have added complexity into the organization which now in turn makes it harder for us to grow further. As a result, we have now pressed the reset-button for the entire Group. This means we will build a smaller and less complex organisation than we have today, which will simplify our business model in order to reach more children. It will also impact our costs. Finally, in some markets the reset entails addressing a clean-up of inventories across the entire value chain. The work is well under way.”
In result, the LEGO Group said it would need to reduce its total global workforce by around eight percent. This would impact approximately 1,400 positions, the majority before the end of 2017, said LEGO
Currently the LEGO Group employs approximately 18,200 people.
**The Associated Press Contributed to this report**
