LEGO Group is to “reset the company” after single-digit decline in revenues for first half of 2017 [News]

According to their most recent press release, the LEGO Group’s revenue for the first half of 2017 is 5 percent down compared with the same period in 2016. Other key figures like operating profit as well as net profit are down too — 6 and 3 percent respectively. The board of management blames increased costs associated with investments in production capacity and organisational capabilities for causing mixed performance across various market regions. For instance, revenue has declined in the United States and in parts of Europe. On a brighter note, in growing markets such as China, revenue grew by double digits.

Commenting on the financial report, LEGO Group Chairman Jørgen Vig Knudstorp claimed that the company has already taken steps to change the situation for the better. The Group aims to bring the LEGO building experience to more children all over the world, and for this purpose the management is looking forward to resetting the company and revising and restructuring various internal processes.

Pressing the reset button includes some decisive moves which pursue a goal of simplifying the company’s elaborate global structure built during the past five years. “This means we will build a smaller and less complex organisation than we have today” said Knudstorp. As a result, the LEGO Group believes it would need to cut its total global workforce by around eight percent. This would impact about 1,400 positions. Currently the LEGO Group employs about 18,200 people.

One of the key goals of resetting the business is the development of innovative new toys. Knudstorp explains “We will find more opportunities to engage with kids and parents, including innovative ways to blend physical building and digital experiences, such as our successful LEGO Life social platform and LEGO Boost building and coding set”.

The full press release can be found on the LEGO Newsroom page.

13 comments on “LEGO Group is to “reset the company” after single-digit decline in revenues for first half of 2017 [News]

  1. Reed Yaeger

    It’s because the CITY Minifigures are starving for HEALTHY food only available from FARMING. Hot dogs, ice cream and pizza only tastes good for so long…..had farming accompanied the last release of construction like they shared in 2009 the Minifigures would be happy and sales in CITY would be higher.

  2. Seth Schmidt

    They should try to make their prices at least a TINY bit lower. I used to buy at least a small $10 set every time i went to the mall, but now all those sets are now $20! so I just buy LEGO minifigure packets.

  3. Optimaximal

    Behind every family business beats the blackened heart of capitalism…

    The amazing thing is, LEGO always sell themselves as something different, being privately owned and not beholden to shareholders. Thoughts go out to the 1.5K losing their jobs over this…

  4. Wouter Lievens

    I blame it on there being no castle/fantasy themes other than that horrid Nexo stuff! I gobbled up as many of the LOTR and Hobbit sets I could afford, and bought the mediocre last round of Castle stuff from few years back, but I basically stopped buying now…

  5. Don

    I just don’t get it LEGO is not marketing and acknowledging the AFOL community. Also the release of every Star Wars movie with it’s new ship designs that look familiar doesn’t scream “make this a box” to me. Also a bit lower price overall wouldn’t hurt.

  6. Grumpy Old Man

    Fewer multi-hundred dollar sets, more sub-thirty dollar sets.
    Quit with the artificial scarcity of the collectible minifigure nonsense.
    Cut back on the licensed themes by about ninety percent, develop more in-house ideas.
    Get out of the movie and TV and social whatever business and concentrate on the bricks.
    There, I just saved the company. Or went back in time to about 1985, I’m not sure which.

  7. Michael

    It would seem to me that Castle and dare I say, classic styled space would really help. I get it they have the Star Wars IP, but there’s something about the classic space theme of build, explore, and create that’s been missing for the last few years.

  8. Cheefachi

    LEGO is doing a great job appealing to AFOLs, the Idea sets are pretty much all for AFOLs and the bigger more expensive sets are also designed for AFOLs. In fact I think they have focused too much on adults and have to try to get more interests from kids. Its tough, my kids are glued to youtube constantly and their time with other media including LEGO, crafts, reading, and even computer games are all suffering. The NYTimes had a good article about LEGO, all toy manufacturers are suffering from less time kids are spending on toys vs. mobile gaming and videos. Having game franchises, movie franchises, a combination of expensive and cheaper sets, a toe in the collectible market, all these things are good and serve to diversify LEGO’s revenue base. So I actually believe the company when they say that a creep of bureaucracy is more to blame than any specific omission. That said, I’d kill to have a real castle theme again!

  9. Ciano

    As soon as I saw the prices on the last several waves of City sets, I knew this was going to happen. The airshow, the gas station, they had no reason to stray so grotesquely far from the 10 cent per part ideal. Make no mistake, they were trying to see how far they could push the price/part ratio before customers pushed back. Now that they have the results of their experiment, they can use them as an excuse to fire 1,400 people, so they can make back the money they lost to overpricing their toys by saving on payroll. All of this is fair in the eyes of the law, of course, because they never did and never would admit that this is what they were doing.

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