Sunday, September 17, 2017

LEGO Shed Jobs

LEGO are trimming staff and 1,400 jobs are expected to disappear as a decade long-run of sales growth ends after expansion failed to deliver expected sales growth. 

The Danish manufacturer of toy building blocks said it is cutting 8 percent of their global workforce after reporting a 5 percent drop in first-half revenues to 14.9 billion DKK (£1.8 billion), with net profit slipping 3 percent to 4.4 billion DKK. 

The downturn is the biggest hit the business has suffered since coming close to bankruptcy 15 years ago. 

Chairperson Jørgen Vig Knudstorp said he was “pressing the reset button for the entire group” in a bid to arrest the declines, which came after investment to boost production capacity “to support higher expectations of revenue which failed to materialise”. 

LEGO are the world’s No. 3 toymaker in the $90 billion (£70 billion) a year global market, behind Mattel and Hasbro, and the leading industry player in $15 billion European market, according to data from analysts at NPD Group. 

They have consistently seen off competition from challengers, delivering near-constant double-digit growth for a decade, with the family-owned business adding increasingly technical products to their traditional building sets and mini-figures, as well as video games and franchise such as the LEGO films. 

Anyway, this did not deliver steady growth and last month British chief executive Bali Padda – the first non-Dane to run the company – was abruptly replaced after just eight months in the role. 

[Knudstorp’s spin on the substitution of the 15-year veteran of the toy company was that the 61-year old was only intended to hold the role for a short time because of his age – and not due to poor performance!]

The business world is a tough place, that's for sure.

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