After suffering from the first drop in sales in over a decade, Lego has announced plans to cut 1,400 jobs in order to save costs.
Lego said in the group’s half-year results that their revenue fell by five percent to £1.8 billion. In response to the disappointing results, the 85-year-old business will cut eight percent of the 18,200 workforce.
Jørgen Vig Knudstorp, the chairman of the Danish group, said: “We are very sorry to make changes which may interfere with the lives of many of our colleagues,”
“Our colleagues put so much passion into their work every day and we are deeply grateful for that. Unfortunately, it is essential for us to make these tough decisions.”
Despite the growth in China, Lego still saw an unexpected drop in results.
“We are disappointed by the decline in revenue in our established markets, and we have taken steps to address this,” Knudstorp said.
“We are working closely with our partners and we are confident that we have the long-term potential of reaching more children in our well-established markets in Europe and the United States. We also see strong growth opportunities in growing markets such as China.”
“In the process, we have added complexity into the organisation which now in turn makes it harder for us to grow further. As a result, we have now pressed the reset-button for the entire group.
“This means we will build a smaller and less complex organisation than we have today, which will simplify our business model in order to reach more children. It will also impact our costs. Finally, in some markets the reset entails addressing a clean-up of inventories across the entire value chain. The work is well under way.”
The toy-giant said that the jobs would go by the end of the year. Employees are to expect redundancy packages and a range of other support.
Earlier this year, Lego announced plans to replace boss Bali Padda after just eight months in the role. The group are planning to double office space in London, where more jobs are hoped to be created.