Lego Knows It Made Too Many Pieces


Lego, the toymaker now admits it made too many of its plastic interlocking bricks.

The toymaker announced that its sales and profit had dropped for just the first time in the last 13 years, blaming its weak performance on the need to sell of its excess inventory at cheap prices.

A spokesperson for Lego said it had too much inventory in its warehouses and stores. A spokesperson said that there was not sufficient room to bring in toys for stores during 2017 and the toy industry is driven on newness.

The Danish company said it was dealing with an inventory issue and a fall in its sales in both North America and Europe, which helped to drag down last year’s performance.

CEO of Lego Group Niels Christiansen said no quick fix was available and it would take some time for the firm to grow over the long term.

This weak performance at the company arrives after the toymaker cut over 1,400 jobs in September across the globe saying there was a need for a reset in the business.

Revenue during 2017 fell by 8% ending at 35 billion Danish kroner or $5.8 billion, in comparison to 37.9 billion kroner during 2016.

Profits before taxes were down 18% to end 2017 at 10.4 billion kroner. Christiansen said that overall 2017 had been a challenging year. However, he did say the performance of the company improved towards year end, with sales increasing in seven of its largest 12 markets during December.

The company has also been increasing its sales across new markets and in particular much of Asia. Lego announced that it has seen strong potential in China, where its sales had growth in 2017 of double digits.

We begin the new year in much better shape and the coming year should stabilize the business through continuing to make investments in products, global marketing and better execution, added Christiansen.

Lego said last September that its results for the half year suffered due to stretching itself thin through diversifying into products that had not been toys such as its Lego movies.

Jorgen Knudstorp the chairman at Lego said then that by adding complexity to the business it made it more difficult to grow.

He added that the company pressed its reset button for the whole group with the idea of building a less complex and smaller organization.

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