World famous toy manufacturer Lego is set to cut its global workforce by eight percent in an attempt to simplify its business model, the Danish firm announced Tuesday. Despite the surprise announcement, the company’s chairman however expects these layoffs to be a “one-off”.
“We’re very focused on making a smaller and more simple organization and also do a cleanup of our inventory positions in some markets. So ultimately for us that has been the aim and we will conclude all of that within this year,” Jorgen Vig Knudstorp, chairman and former CEO of Lego Group told CNBC Tuesday.
“We will of course, this year and in future years, continue to be focused on our cost base and seek constant opportunities for optimization as we have done through the past 15 years.”
“However, this is a sort of one-off, big move that really relates to ‘do we operate in a simple way or as simple way as we should’ and it is, what we’re announcing today, is the totality of the effort addressing that problem.”
At present, the Lego Group has approximately 18,200 people working for the company; however the toymaker expects to see most of the layoffs – a total of 1,400 positions – to take place by the end of the year.
The news of the layoffs come as the toymaker posted a five percent decline in revenue for the first half of 2017 – its first sales drop in more than a decade.
Here are some of the highlights:
- Revenue fell 5 percent in the first half, to 14.9 billion Danish crowns ($2.38 billion), compared with 15.7 billion Danish crowns in H1 2016
- Net profit came in at 3.4 billion Danish crowns, compared with 2016’s H1 figure of 3.5 billion Danish crowns
- Revenue declined in markets such as the U.S. and parts of Europe, while it grew double digit in places like China.
