Lego to simplify business activities following drop in sales

After rising from a near bankruptcy some thirteen years ago, Lego seems to have grown to its peak through much efforts and ventures. Unfortunately, the firm’s sales are dropping for the first time again since 2004, and it says it needs to make its operations more straightforward – Cutting eight percent of its workforce globally.

The privately managed Danish company said it had made plans to reset the firm come October with a new CEO. The chairman, Joergen Vig Knudstorp said the firm would carve a smaller and less complicated firm than what’s existing presently, causing simplification to their business and more reach outs to kids.

Lego’s falling sales

During the first half of the year, revenue dropped five percent due to poorer demands in the firm’s key markets in Europe and U.S. where sales have been booming for years; causing profits to slip three percent to $544 million.

The revenues from classic toy lines like the Lego City and other products related to these products, but other products didn’t do well, as well, some investments.

Analysts said the revenue had to come at some point of its drop. The editor in chief and CEO of TTPM, a toy review site, Jim Silver said the firm hit a peak as it was launching series of toys and other products.

Silver said Lego still have some good things to count on, pointing out the Ninjago-based movie that will hit in September and its best selling Star Wars. However, Silver said the toy industry overall is coming off a hard few years.

Vig Knudstorp stated that the final objective is to boost sales once again in the U.S and Europe, hinting sales opportunities in the growing markets like China where sales grew up by two digits this year so far. Knudstorp said Lego needs to make its business model simpler to cut down costs. Especially since 2012, when the firm began much diversification and delving into other things like movies.

He went on to say that the physical blocks should hav the highest focus even when Lego tries to engage parents and kids via online products like coding sets, and digital social platforms. He informed Denmark’s TV2 staff cuts would affect sales and administration, but not production.

Last month the producer of the trendy colored building blocks assigned Niels B. Christiansen, who was a previous head of Danfoss for nine years, as the CEO to take over from Bali Padd. Christiansen will begin t function as the chief executive officer of lego by October 1. Lego with about 18,200 workers doesn’t drop quarterly figures.