The Danish toy maker, LEGO, reported its first decline in sales in a decade in its midyear report. The 5% fall in revenues comes after the abrupt change in leadership in the company this year. Following this dip, LEGO announced that it will downsize its workforce by 8%, that accounts for more than 1400 employees. For more than 10 years LEGO had seen revenues grow above 20% annually. However, in 2016 LEGO saw growth of only 6%, a sharp fall from 2015’s 25% annual growth. And this year LEGO saw its first negative sales growth since its 2004 bankruptcy scare.
LEGO’s executive chairman, Jorgen Vig Knudstorp, stated that they are working on making the toy company a more efficient organization. In the past decade LEGO has grown incredibly fast, and has done so by collaborating with major brands like StarWars, Marvel, and Harry Potter. However it seems that this is not enough anymore. LEGO now must compete with new competitors like Microsoft and Sony who offer video games as an alternative to LEGO bricks, as well as its most direct competitors like Hasbro and Mattel. Growth for a company will not always be the case, but LEGO continued to grow even as new competitors hit the market. After its success, LEGO made many efforts to expand into the entertainment sector by making TV shows and movies, but their efforts didn’t seem to translate into product sales. Despite their marketing efforts, their growth stagnated and fell during the first half of 2017. LEGO is now suffering because of a lack of innovation, and now it is making changes so that in the future their sales and revenues can return to growth.