Danish toy maker Lego said Tuesday it will cut roughly 8% of its global workforce, or about 1,400 jobs, as sales sagged despite the apparent success of its “Batman” and “Star Wars” partnerships.
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The privately held firm said Tuesday that it "now prepares to reset the company," with a new CEO due to take over in October with the task of simplifying the business after years of high growth and expansion into new ventures like film.
Revenue dropped 5 percent to 14.9 billion kroner ($2.4 billion) in the first six months of the year, mainly as a result of weakness in core markets like the U.S. and Europe. Profits slipped 3 percent to 3.4 billion kroner ($544,000).
"We are disappointed by the decline in revenue in our established markets, and we have taken steps to address this," said Chairman Joergen Vig Knudstorp.
The success of “The Lego Batman Movie,” which earned more than $300 million at the global box office, has not translated into strong toy sales. Toys R Us CEO David Brandon said last June that there has been “significant weakness in demand” for Lego products.
Lego produces licensed “Star Wars” products and rolled out new toys for Disney’s “Force Friday II” sales promotion ahead of the winter release of “The Last Jedi” film. Kudstorp said Lego’s Star Wars-related products were a top brand for the company, but noted that sales “slightly declined for us this year,” Bloomberg reported.
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He said the long-term aim is to reach more children in Europe and the United States and added there were "strong growth opportunities in growing markets such as China."
The company, he said, needs to simplify its business model to reduce costs. Since 2012, the group has built an increasingly complex organization to support global double-digit growth.
"In the process, we have added complexity into the organization which now in turn makes it harder for us to grow further," Vig Knudstorp said.
He told Denmark's TV2 station that staff cuts would mainly affect administration and sales, not production.
Last month, the maker of the famous colored building blocks appointed Niels B. Christiansen, who headed thermostat-maker Danfoss for nine years, as its chief executive to replace interim CEO Bali Padda. Christiansen will start Oct. 1.
Based in western Denmark, Lego does not release quarterly figures. The group currently has about 19,000 employees around the world.
The Associated Press contributed to this report.