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Lego sales are sinking like a (plastic) brick

by Matt Phillips
Sep 5 2017, 5:36pm

All of the sudden, Lego’s sales have gone wobbly.

The family-owned Danish toymaker reported that sales fell 5 percent in the first six months of the year — the first such decline in more than a decade. Weak sales in rich regions like the U.S. and Europe helped push the company to announce plans to cut 1,400 jobs, or about 8 percent of its global workforce.

The sales slump comes after more than a decade of growth for Lego, including new projects in everything from feature films to streaming to theme parks. Now Lego is trying to get back to basics.

In a statement accompanying the first-half financial results, Lego Group Chairman Jørgen Vig Knudstorp said: “We have added complexity into the organisation 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.”

Lego reports its financial performance every six months, or each half of the year. While the growth rate in Lego’s revenue had been slowing for some time, 2017’s first half is the first time growth has turned negative in years:

Other notable details:

  • Even the Dark Knight may have been a weak spot for Lego this year. In June, Toys R’ Us said as part of its own profit report that sales of Lego Batman playsets were weak following the release of a movie about the character. Lego Group has declined to comment on Batman sales, but said sales of its Star Wars playsets have been a strong point, Bloomberg reported.
  • Lego Group was founded in 1932 by carpenter Ole Kirk Christiansen. Its name is derived from the Danish phrase “leg godt,” which means “play well.”
  • Lego has been on a tear in recent years, as sales pushed high enough at moments to make it the world’s largest toymaker. But it has hit rough spots before, including flirting with bankruptcy back in 2003.
  • According to Guinness World Records, the tallest structure ever built with Lego bricks was a tower built in Milan, Italy, in June 2015 as part of a charity fundraiser. It measured 35.05 meters high, or just shy of 115 feet, and required approximately 550,000 Lego bricks to complete.