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Lego to cut 1400 jobs after decline in sales

06 September 2017

Danish toymaker Lego announced plans to cut around 8% of its global workforce as it reported a drop in profit and sales for the first half.

"We are very sorry to make changes which may interfere with the lives of many of our colleagues", said Jørgen Vig Knudstrop, the chairman of the group.

"Our colleagues put so much passion into their work every day and we are deeply grateful for that". Profits fell by 3 percent to $544 million.

Despite the growth in China, Lego still saw an unexpected drop in results.

Lego said it will cut approximately 1,400 positions, the majority of them before the end of 2017.

Sales for the first six months of 2017 totaled 14.9 billion Danish kroner ($2.4 billion), down from 15.7 billion kroner for the same period past year, according to its half-yearly financial report.

Lego said revenues had disappointed in its core markets of the United States and Europe, after a decade of double-digit growth and launches spanning Lego sets, video games, movie franchises, robotics and smartphone applications. "It will also impact our costs", said Knudstorp.

Knudstorp says the "reset" will feature cost-cutting, both via layoffs and a simpler business model that will entail "a clean-up of inventories across the entire value chain". The number of employees boomed too, jumping from 4,200 in 2007 to the current 18,200.

"We have now realized that we have built an increasingly complex organisation to a degree that makes it hard for us to realise our growth potential", he added.

Are kids falling out of love with lego?

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".

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.

Lego to cut 1400 jobs after decline in sales