Lego has reported its first drop in sales and profits in 13 years, blaming “too much” stock.
After a “challenging year”, the Danish toy company reported an eight percent decline in sales to £4.2 billion.
“2017 was a challenging year and overall we are not satisfied with the financial results,” said Niels Christiansen, Lego’s chief executive.
“We started 2018 in better shape and during the coming year we will stabilise the business by continuing to invest in great products, effective global marketing and improved execution. There is no quick fix and it will take some time to achieve longer-term growth.”
Profits for 2017 dropped by 17 percent in a tough year for the group who also axed 1,400 jobs.
The toy company has been seeing promising figures in Asian markets, where the group has seen growing sales.
Lego acknowledged the “unique opportunity for growth” in China last year and announced plans to increase investment in the country, as well as complete work on its first Chinese factory.
In a bid to appeal to the Chinese market, the Dutch company created a new “Ninjago” range – featuring dragons, ninjas and a tea-drinking sage.
The group’s former chief executive, Jorgen Vig Knudstorp, said the company had developed too many layers and overlapping functions. Lego has said it now plans to press “the reset button” and aims to build “a smaller and less complex organisation”.
Lego announced last week of its plans to create new building blocks made from plant-based plastic sourced from sugar cane, in an attempt to become more sustainable.
“At Lego we want to make a positive impact on the world around us, and are working hard to make great play products for children using sustainable materials,” said Tim Brooks, vice-president of environmental responsibility at the company.
“This is a great first step in our ambitious commitment of making all Lego bricks using sustainable materials,” he added.