Lego posts its first fall in sales and profits since 2004 as boss says there's 'no quick fix' to halt decline

  • Sales down 8% to 35bn Danish krone (£4.2billion) in 2017 -first fall since 2004 
  • Boss Niels B. Christiansen blamed the fall on having to ‘clean up inventories’

By Press Association and This Is Money Reporter

Updated:

Lego posted its first fall in annual sales and profits in over a decade today after a ‘challenging’ 2017.

The Danish toymaker, which slashed 1,400 jobs last year, said sales fell 8 per cent to 35billion Danish krone (£4.2billion) in 2017.

That is the first time annual sales fell since 2004, when the company nearly collapsed. Pre-tax profits fell 18 per cent to 10.2 billion Danish krone (£1.2billion).

Lego has posted its first fall in annual sales and profits since 2004, despite a second half boost from sales of Lego Star Wars products

Chief executive Niels B. Christiansen blamed the sales fall on having to ‘clean up inventories’, or that it had to sell off remaining stock on the cheap.

But he added that the company ended the year in a better position as consumer sales were flat in the year and grew in seven of their 12 largest markets in December.

‘During 2017, revenue in our established markets declined, primarily due to actions we took to clean up inventories. This decline impacted our operating profits. 

'We also simplified and reduced the size of the organisation to meet current business requirements and these difficult actions are now complete. Our balance sheet, cash flow and profitability, remain sound,’ Christiansen said.

He also said the company had started 2018 in a better shape and was looking to 'stabilise the business' this year. However, he conceded that there was 'no quick fix' and that it would take 'some time' to achieve longer-term growth. 

Lego, which employs around 900 staff in the UK, announced 1,400 jobs cuts last year in a bid to slash costs to counter falling sales in the US and Europe.

The company said at the time that the job cuts were part of a 'reset' for the group, which has become 'increasingly complex' over the past five years, making it harder for Lego to grow. 

Despite being one of the biggest toymakers in the world, Lego still faces changing market environment, with children increasingly playing games on their mobile phones and tablets. 

The company has tried to build a digital business and expand into other fields by, for example, launching the Lego Ninjago movie. However, this has not managed to offset falling sales.  

 

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