Lego Tries to Stop Global Customers From Buying Its Bricks to Boost Sales in US

© Flickr / BRICK 101LEGO Ideas Research Institute
LEGO Ideas Research Institute - Sputnik International
Lego, the world’s most popular toymaker, announced Tuesday that the company saw a reduction in profits for the first half of 2016, as a part of a plan to boost capacity. It discouraged customers from buying bricks, as it has become difficult to meet the North American demand.

As Asia and Europe sales have skyrocketed, there is little to no growth in North America as the company is not able to satisfy the demand. Scaling back its advertising campaign, Lego cut short-term profits in favor of those in the long-term.

CFO John Goodwin told Reuters, "We are of course excited about [LEGO's success], but the high demand also puts a strain on our factories… We feel we need to invest, to build some breathing space."

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As a result, Lego has enhanced capacity by investing in a new factory in China, expanding production in Mexico, and doubling output in Hungary. The workforce has been increased by almost 25 per cent.

"We are working very closely with our retail partners to ensure that as we go into the important holiday season, the back half of 2016, that we've got all of the levers pulled to get back on the growth trajectory," Goodwin said.

Lego is a family-owned company established in 1932. In the past 12 years, its revenue has increased 15 percent per year, according to Reuters. The company manufactures colorful plastic objects and renews its products by producing building sets for characters and ships from Star Wars, Angry Birds and Disney Princesses, among others. Lego Architecture also offers recognizable iconic buildings. The company has six Legoland theme parks and multiple video games. In 2014, the company released a movie that was a surprise hit, bringing the company hundreds of million dollars.

Demand has not decreased. According to Reuters, despite Lego's short-term policy, in the first half of the year the company's revenue rose 11 percent due to sales in Europe and Asia.

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