Lego cemented its status as a vaunted turnaround story with the success of the “Lego” movies which – fun fact – were produced by Treasury Secretary Steve Mnuchin.
But after nearly a decade of expansion, the company announced Tuesday that it will be cutting 1,400 jobs as it struggles with weak demand for a new line of “Batman” play sets that’s contributing to its worst downturn in more than a decade. The cuts, the company’s first in 10 years, would be tantamount to letting 8% of its workforce go. The move came after Europe’s largest toymaker said Tuesday that sales in the first half fell 5 percent to 14.9 billion kroner.
“We’re losing momentum and we’re losing productivity,” Chairman Jorgen Vig Knudstorp said on a conference call. “We have built an increasingly complex organization. This could ultimately lead to stagnation or decline.”
According to Bloomberg, Lego is suffering its biggest crisis since 2003 and 2004, when the maker of colorful plastic bricks reported record losses. After a turnaround led by Knudstorp that transformed the struggling brand into the world’s most-profitable toymaker, sales have slumped anew as children spend more time on digital devices. Predictably, the shift has created tumult in the C-suite amid rapid executive turnover.