LEGO has just released their financial details for the first half of 2017 and it’s not looking too good for the best toy brand in the world. Compared to the same time as last year:
– Revenue down 5 percent to DKK 14.9 billion compared with DKK 15.7 billion
– Operating profit down 6 percent to DKK 4.4 billion compared with DKK 4.7 billion
– Net profit down 3 percent at DKK 3.4 billion compared with DKK 3.5 billion
– Cash flow from operating activities was DKK 4.6 billion compared with DKK 3.9 billion
LEGO Group Chairman, Jørgen Vig Knudstorp stated,
We are disappointed by the decline in revenue in our established markets, and we have taken steps to address this.
We are working closely with our partners and we are confident that we have the long-term potential of reaching more children in our well-established markets in Europe and the United States. We also see strong growth opportunities in growing markets such as China.
Some of the best performing themes for 2017 include LEGO City, LEGO Friends, LEGO DUPLO, and LEGO Technic, all in-house IPs. The LEGO Batman Movie also did very well.
As a result of the profit decline, the company will have to trim its total global workforce by about eight percent which is about 1,400 jobs by the end of the year.
The LEGO Group will now have to restructure the company as well as having to clean up their inventory to simplify the business model.
What are your thoughts on this surprising piece of news? Let us know in the comments below.
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I honestly think Lego has too many different themes, which comes with high costs. I’m also surprised that the StarWars theme isn’t one of the best performing ones, looking at the extensive and large waves of this theme.
I actually wasn’t surprised that Star Wars didn’t do well. The recent exclusives have been disappointing from points per part and choice of UCS. The Tie sets were over priced this on discount currently, that hoth set had no exclusive value at all and the snow speeder was ok-ish.
Then there’s the duplication sets like the new millennium falcon (the $149 one) which isn’t too much of a difference to warrant older folks that had the older one to purchase the new sets, two xwings, etc. I’m not sure how well the buildable Star Wars figures are too considering they have been on discounts ever since they came to the market.
I personally have shifted all my buying to other themes. The sets for the Lego ninjago movies are all so cool. Examples the city set with the amazing build and price per part, the destiny ship which has a bed that can open up to fit a Minifig.
Yeah, Lego made too many repeat sets and sets priced at $25 that could ave been so much better if priced at about $40. (I’m looking at you Duel of the Fates, Carbon Freezing Chamber, Echo Base).
Meanwhile it has been about a decade since the last time we had a proper TIE interceptor or TIE bomber…
And literally never had any large scale rebel ships beyond the Tantive IV.
WE NEED HOME ONE!
Well, Kylo Ren’s Tie Silencer is very similar to an interceptor, so I am fine with no Imperial Interceptor for a few years. Meanwhile, a TIE bomber is really needed.
It feels like the cost of sets has gone up. Yeah, I’ve seen the analysis that cost per brick has gone down, but if total set costs have gone up it doesn’t matter much. Folks still have to chose between needs and wants with the same limited income.
Assuming that both the price per piece has stayed constant, and the average price per set has risen, it’s still possible that the real number of low priced sets has remained the same. This is because LEGO also releases many more sets per year than in the past. They just have to be careful not to become oversaturated and overwhelm the consumer. There needs to be a balance between convenience and variety.
Quality certainly is an issue. I picked up a few of the Ninjago Collector figs (blind bags) this weekend. You can see and feel the plastic is different. There’s also significant clutch issues with the figs. They don’t stay connected to their plates, Misako’s hair doesn’t stay on at all, and Garmadon in PJs has the same issue with his helmet.
I have no idea why the collector figs seem to be wildly different quality from official sets. They typically feel like the weakest made plastic and most likely to sustain damage of figures. Maybe lego thinks people will only display them and therefore can have much lower quality standards.
Could be. Just let me tell my 7yo she can’t play with my minifigs anymore though. “They’re display only now” lol.
Or, you could tell you 7 year old to be gentle with her toys and make sure she knows not to break them. That way she can keep playing with your toys and you don’t have to worry about them breaking, unless by freak accident. There is still a risk, but what is worth more: a $4 Lego minifigure, or your daughter’s happiness? 🙂
It was a joke. She already plays with the stuff and is gentle.
It’s partly because the CMFs are made in China. They do this to keep the figures at a low price point. Otherwise all those custom molds and prints would be prohibitively expensive.
Plus the quality of the bricks have gone down. I hear people compare today’s fire station with 20-30 years ago. But 30 years ago you had large baseplates and no stickers. The Junior sets are very expensive because of the printed pieces. It’s not fair to compare. Also in the USA wages have been pitiful and actually gone down thought the last decades.
Agreed. Sets may have more parts, but more sets have a higher MSRP than ever before. Even if they are good deals they are pricing themselves outside the range of what I can afford.
Well, they sure aren’t going to be “reaching more children” by releasing $899 sets that even most adults can’t afford.
Exactly, the new falcon is great, the minifigures, not so much, the set is 800 and a new mold for porgs wast made, and only two figures are “exclusive”
Please tell me what new mold was made for this set. The only new elements in this set are the exclusive prints, which cost nowhere near as much as the development of a new mold.
Horusmaster is complaining about the LACK of new mold for the ports.
I meant that no new mold was made
I agree with both Mike and Seb here. Costs have been increasing enough that I’ve had to be more selective about sets. For example, the City service station still out is way too high of a price point. As much as I like it, I can’t justify the price.
I also feel like they’re expanding a bit too far beyond their basic idea of, “Be as creative as you can with the bricks available.” I’ve seen a lot of new molds in the past year that have made me think, “I like this new piece, but did we REALLY need this piece?” Think of the costs associated with molding an entirely new piece.
I think LEGO is much more careful now than they were say fifteen years ago when it comes to creating new molds. In the past, they were making molds that were only used in a few sets, were very complex, and could have been accomplished using existing bricks.
The trend I’ve seen in recent years is that when they introduce a new mold, it’s immediately used in a lot of sets. They also tend to be smaller elements, like the 1×1 quarter circle tile. The general response from builders also seems to be positive, as MOCers quickly find ways to incorporate them into their own designs.
They now focus on making pieces that enhance the entire system, as opposed to making pieces that are tailor-made for one purpose or set. It’s really the most forward-thinking way to go: having designers slowly adding things like cheese slopes, 1×1 quarter round tiles, etc enhances all building possibilities far into the future.
New molds now are tiny and enhance the sets. Look at the molds from 15-20 years ago with underwater Agents being huge and useless for anything besides the set they are in. I love Aquazone but they had dome pieces only used in 1-2 sets. Even the base doors and hinges are only used in that set. New pieces today are used in many sets throughout the year.
The Lego Batman movie sets were pretty ordinary until the second wave. Too many small sets with the same Batman and a tiny build. Why buy them all when one is enough. They haven’t sold here unless on deep discount.
Star wars was not great AOH at prime example. Classic Batcave wasn’t very popular either. This year has been below par for Technic in my opinion so I am surprised about Technic doing well. Maybe the small sets did well.
I just think the sets weren’t as good and they released too many sets. Ninjago movie sets have been my standouts along with the ideas Saturn V.
Their pricing strategy was inverted, they brought on more, less expensive production capacity, but raised msrp prices to 20-30% higher, as they were saturating retailers with more themes… so product languished, retailers are cutting back shelf space as well, now that sales have dipped. Classic case of a bad pricing strategy, yes, they are a premium product, but putting sets out $20-$30 higher really limited their sales.
I think there are many many issues besides just cost. If you had years of duple digit growth and then one bad first half why fire 8% of the work force? Because LEGO most know this is going to continue.
LEGO is making too many sets, they cost too much in certain themes (Star Wars). For several years I never saw sets on clearance and rarely on sale. Since 2015 every set is almost always 20% off at the big stores, then sometimes 20% off those prices. You can’t make 800 sets a year and expect stores to carry them all, so now we get massive clearance events.
And maybe LEGO should look at what sold the best, IN HOUSE PRODUCTS, yet we get less and less of those and what we do get isn’t original, just rehashes.
Bring back castle, pirates, and the Wild West already! And something with dinos as well! I know a few under 10 year-olds wanting dino sets so badly!
There are going to be about 10 Jurassic World 2 sets coming out in about 6 months. 5-6 System sets, three Junior sets and two Duplo.
For some reason I feel Space and Castle don’t sell well. One of my favorite themes is Alien Conquest which sold so badly the second year was canceled. However LEGO makes 40 Nexo Knights sets a year and 40 NinjaGo sets a year, they can’t just make 5-6 sets in both themes every year? Or even just do Castle one year, then Pirates the next?
Of course then there are those who think the problem is LEGO is too liberal with wanting to make plant based bricks and too many women sets. It makes me question the human race.
…what do politics have to do with the mentioned Lego themes? Are Pirates now considered politically incorrect? I wouldn’t put it past society…
Having too many female sets (like NASA and the past Ideas set) is too polite to certain crazy people in the world now.
“Too many women’s sets”
Well, if Friends and the Disney stuff keeps selling as well as it does, I doubt they’ll stop producing the female-centric line. I don’t know how you’d analyze whether the Friends line has any impact on the sales of other Lego themes.
Oh no, there were a few comments that were clearly from horrible people who hate women. They were making fun of NASA Scientists Idea set that’s coming out.
Its got something with the high prices and the remake of sets. Last year i got 7 star wars sets, this year only 2, small ones, i know the licensing is expensive, so they raise the prices, but they do not increase the minifigure count, some expensive point less sets that were in 80-140 range came 3-6 figures, 1-2 exclusive or main character, and the rest some generic character, examples are rey and snoke recently, this made me not buy the sets with jyn erso or kylo ren despite being favored characters. Lego’s attraction strength was the minifigures but they have dropped the ball there
I have no interst in minifigures, yet I continue to buy LEGO.
It occurs to me that the kerfuffle between the company and Jangbricks may have been symptomatic — not to mention karmic — of what’s going on with Lego.
There are issues with Jang and LEGO? He buys the sets at full price and 99% of the reviews are very positive, so what could LEGO have a problem with him about?
Are you aware that he basically received a cease-and-desist for posting those review videos before ForceFriday2? It was a mess — a clear case of corporate bullying, IMHO.
It is, basically. what a mess…
They went out of the way to apologize on his channel and explained the situation. Lego didn’t have a choice. I don’t think any other company would have done so. In their case, they were forced to send out letters by Disney because of the embargo. That’s why we didn’t even see pictures here on thebrickfan. They also recently sent Jangbricks an ipad mini in a master builder box.
Sorry but if he broke embargo then it’s a clear case of Jang being in the wrong.
The embargo date for reviews of a product really shouldn’t be multiple days/weeks after people were able to purchase and access a product…
Maybe not, but if they were and he violated it then he’s in the wrong.
To be fair, Lego officially placed the blame on retailers for releasing the sets early and not people uploading videos, based on their comment on Jang’s video.
That’s completely insane but sounds like Disney being dicks and not really LEGO.
I think you’re reaching to imply correlation is related to causation. Jang received a cease and desist from Lego (likely at the behest of Disney) because the products were being displayed before their official release. Regardless of whether he acquired them legally, Lego and the IP holder have a legal obligation to cover their bases when it comes to enforcing their target release date among retailers, otherwise there exists a future president to release inventory early.
Well, I haven’t bought any Lego since around Christmas. Maybe I’m what dropped their sales by 8% lol.
I think another thing to consider here is the knock off companies, such as Lepin. They are growing, competing with Lego. I’m sure at least some of the profit loss is because of this. Talk about loyal fans…
I’m not going to be loyal to a company. If another company can compete for my dollars then good. Mega Construe has been getting better and better. Plus some of the knock offs of original sets are pretty good. Quality of pieces isn’t there, but neither is the price.
It’s not a question of loyalty. What Lepin is doing is theft of intellectual property, and by buying their product, you are perpetuating that behavior.
What people who justify buying Lepin do not realize is that LEGO sets are the price they are because they need to pay the designers to build the sets in the first place, graphic designers to make the boxes, personnel to review the sets and make sure they meet quality standards, and in the case of third-party intellectual properties, licensing fees.
Exactly.Thanks for having better engleesh skills than myself, and writing a long comment that I was too scared to write. xD
Yep.
That’s just like, your opinion, man.
I own the new Lego UCS Slave I, because that’s available, but for the rest…
… my UCS – X-Wing, Y-Wing, B-Wing, SSD, ISD, Tantive IV, Nebulon B, Venator SD, Imperial Shuttle, Tie Interceptor, Vader’s Tie Advanced Prototype, Tie Fighter – all Lepin.
Why?
Because Lego don’t sell those anymore and I’m not rich or foolish enough to indulge in the insanely expensive secondhand market. No regrets at all.
Saved myself an absolute sh1t-ton of money, and the quality is almost identical. It actually looks better without ‘Lego’ all over everything. I don’t buy it because it’s ‘Lego’, I buy it because it’s Star Wars.
I’ll buy Lepin as long as that is the only reasonable option in terms of availability and price. Also, yes I have the new UCS Falcon on Lepin pre-order for 1/3 of the cost – don’t mind if I do.
Agreed. I get what myscrnn is saying, and I understand that design and graphics cost money. I prefer lego, but I have very real limitations financially to work with. When I see lego prices rising, and cheaper comparable options available then I have to take that into consideration. The only way I can realistically afford a UCS Falcon is through Lepin.
Do you have no moral compass, both of you? Just think about what you are doing for a second! It is theft! smh
Yeah,It a theft but you think people will care about that ?
Main Target of these knock off are country that Lego price very expensive.
People will not go buy Lepin or SY,Decool etc etc if
they can afford Lego (Unless they do something that lego never do)
Well, I’ve actually become more heavily involved in the non-knockoffs like Cobi or Mega Construx. This may be due to me being older, but while Lego is releasing themes like Nexo Knights and Ninjago for years at a time, which largely don’t interest me, other companies are producing sets based on licenses or ideas that I can’t get out of Lego, like Halo, real military, or Pokemon
That is different than a knock off company like Lepin. The other brands like Mega Blocks are completely acceptable.
Just wondering what kind of market impact the growing sales of competitive, high quality brands has on Lego, and if it’s different from previous years.
Christ! Everybody here is about that smart as “a library” (or radio – as we use to say over here) and NO-ONE actually takes a look at the interim report and ACTUAL FACTS! The reason why LEGO considers to cut 1,400 jobs is NOT because of the poor sales – but because of the line in the interim report that reads “Cafh Flows from Financing activitites” .. compared to 2016 period . its 1.6 bln DKK loss! That is the BIGGEST LOSS BY FAR on the whole interim report!! You smart %Y*!$,, who just repeat here some mantra about which sets should be discontinued / which should be kept.. simply have absolutely no inkling as to the REAL REASONS, why LEGO plans these cuts! Look at the line that says operating profit.. yeah.. its down by some cca 200 mil DKK – but thats a half year status sna the biggest sales season (pre-Christmas) hasnt started yet.. so you think that LEGO would now -just all of sudden – panick and cut tje jobs because of some loosy 0.2 bln DKK????
does anyone of you ever worked in financial? Seems not! Otherwise you would know that these results do not come as a “total surprise” all of sudden at the end of June! You have monthly, maybe even bi-weekly continual overcasts over the year, how your sales, credits, bank accounts, loans are doing.. you just dont work in a blinded darkness for 6 months – and then, next morning to wake up with this interim report “jesus. what we are going to do… ?”
they have known the trend for months and still released new wave of several themes that – according to everyone “smart in these discussions” should be abandonded.. Im simply sick of so many ppl who are just too lazy to actually SEE THE FACTS in the Interim report and to put 1 +1 together.. or perhaps they are so illiterate that they can differentiate between SALES and FINANCIAL OPERATIONS.. and to start flame wars which them is better and worse is all that they can do..
Thank goodness we have a kind, welcoming financial expert willing to provide us with knowledge we’re not trained in and explain respectfully how Lego makes its financial determinants.
Wait, no we don’t.
oh yeah.. you do need one since you are all proved to be totally illiterate as to understand the interim report.. not everybody works in financial, I got that.. but being that lazy – as all of you criticizing me, well, that speaks for itself.
Finances………………. maybe. I’m just going to quote your most recent line here to see if you can guess what I am thinking:
“and to start flame wars which them is better and worse is all that they can do.”
Did you not see all the red errors all over your screen?
His screen probably broke from the fire he caused.
For some reason I read this comment hearing the voice of Vizzini from the Princess Bride saying it.
I’m having a real hard time imagining Vizzini reading all of the spelling and grammar errors. Maybe if he’d just been shot with a tranq gun right before starting to speak…
Frankly the last year’s Star Wars sets were very uninspiring. No interest at all for my children.
U was under the impression SW itself was uninspiring……………… 😉
“U”?
I don’t do ‘textspeak’.