On Tuesday, Lego announced that they are to lay off 8% of their staff and restore their business after reporting their first drop in sales in more than a decade. Their mid year revenue reported a 5% decline after their chief executive was removed. The company predicts that they will not expect growth in the next 2 years where revenues has disappointed core markets of the U.S. and Europe after a decade of double digit growth and launches of Lego sets, robotics, video games, movie franchise, and smartphone applications.
Previous CEO, Jorgen Knudstrop, managed to expand and keep up with rising demand in Asia even when the global toy market shrank after the 2008 financial crisis. In 2004, Knudstrop fired consultants and hired new designers to bring in higher margin products.
Between the months of January and June, Lego sales reported $2.38 billion which topped off Hasbro Inc.’s sales of $1.82 billion and Mattel Inc.’s sales of $1.71 billion. Last year’s revenue growth slowed down from 25% in 2015 to 6%.
The company currently employs 18,200 people and is expected to cut about 1,400 positions which include 600 at their headquarter in Denmark, most to be cut before the end of this year.