Economy

Lego struggles to boost sales after 13 years of growth

Lego struggles to boost sales after 13 years of growth

Lego's sales fell a year ago for the first time since 2004 as the Danish toymaker struggled with tough retail markets in Europe and North America, highlighting the challenges facing the new chief executive.

The Danish toy maker's 2017 revenue fell by eight per cent to 35bn Danish kroner (£4.2bn), as compared to 37.9bn kroner in 2016.

Pre-tax profits slid 18% to 10.4bn kroner in 2017. In 2017, sales and profit slumped as Lego had to reduce inventories that were based on excessively optimistic forecasts.

The Danish toymaker said dealing with the stock issue, as well as a drop in sales in Europe and North America, had dragged down its performance a year ago.

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Lego Group chief executive Niels Christiansen stated that there was no quick fix and the firm would need more time to grow in long term.

Christiansen says the clean-up is now over, with sales expected to start growing again next year. But we did have a good finish to the year.

The company saw double-digit growth in China and the declines in established markets were not caused by declining consumer sales, but rather the value of those sales.

Lego said that it saw "strong potential" in its business in China, where sales enjoyed double digit-growth previous year.

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All in all, The LEGO Group reported a decline in revenue and operating profit for 2017, but ended the year in a better position.

The company's Lego Ninjago series benefited from the release of the movie in September. The LEGO Group sees opportunities to return to growth in these regions and will work closely with retail partners to bring LEGO® play experiences to more children.

The report comes on the heels of some big management changes, a decision to cut 1.4k employees (8% of their global workforce) back in September, and an overproduction issue that forced LEGO to sell off its bricks at a steep discount to make room in their warehouses.

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