THE MAN running Lego A/S wants to merge the toy maker’s iconic building blocks with digital gadgets to help revive a slump in sales.
“We see this as a way of keeping children interested for a longer time, also for later age groups,” Chief Executive Officer Niels B. Christiansen said in an interview. “We are doing a lot in this area and we want to do more.”
Christiansen, who became CEO in October, is trying to keep Lego relevant to a generation of children whose obsession with screens has left physical toys less popular. Lego has so far had mixed results with its digital forays. While the 2014 The Lego Movie and some of the company’s video games were successful, its big 2010 bet on an online multiplayer computer game, Lego Universe, was a flop.
Christiansen says the basic building block will still be the focus as Lego designs new products. He pointed to “Lego Boost” (allows children to build their own toys and then program them to move using a smartphone app) as an example of what he wants to see more of.
“We need to get Lego focused on the right things,” he said. “We must have strong and innovative products.”
Christiansen took over just as Europe’s biggest toy maker hit a wall, ending a decade-long streak of surging revenue and profits. From 2010 to 2015 alone, sales more than doubled as then-CEO Jorgen Vig Knudstorp returned record profits to the owners, the billionaire Kirk Kristiansen family.
But growth took place at what the Danish company has called a “supernatural” pace and the organization simply got too big. In 2017, sales and profit slumped as Lego had to reduce inventories that were based on excessively optimistic forecasts. It cut 1,400 jobs, about 8% of its work force.
Christiansen says the cleanup is now over, with sales expected to start growing again next year.
“Right now we’re focusing on a few priorities and using our new organizational structure to move more decisions out closer to consumers and to the market,” the CEO said. “It’s obvious that we win in the long run by being the most creative.” — Bloomberg