LEGO has announced their first fall in profits for thirteen years. The Danish toy giants are one of the most iconic, enduring and successful toy companies in history and the unassuming, colorful bricks that suddenly turn into devices of absolute torture when stepped on with bare feet remain incredibly popular with both the young and the young-at-heart to this day.
In a market increasingly dominated by digital products, LEGO has managed to remain relevant over the years partly thanks to a number of successful cross-promotions into television and film media. Tie-ins with huge international franchises such as Star Wars, Harry Potter and Batman have allowed for the production of unique LEGO kits and a series of themed video games. LEGO has also had modern-era success by branching out into the world of cinema with the likes of The Lego Movie and The Lego Batman Movie.
However, it seems as if LEGO's consistent popularity and cinematic exposure haven't necessarily translated into cold, hard cash, as the company has announced (via BBC) their first profits fall in thirteen years, with revenue dropping 8% in 2017 compared to 2016. LEGO confirmed that profits had lowered, placing part of the blame on an over-production of bricks. This apparently resulted in a surplus of goods that were eventually sold off at a discount. A spokeswoman for LEGO explained:
"There wasn't enough room to get 2017 toys into the stores, and the toy trade is driven by newness. During the year, revenues declined, however consumer sales - or sales in stores - remained flat. This shows that consumers (kids and their parents) are continuing to buy from retailers."
While LEGO may have experienced a disappointing 2017, there's certainly no need to start stockpiling bricks just yet. As the company's statement points out, sales of LEGO products remain strong, with the issue of more-supply-than-demand the primary culprit in last year's dip. Additionally, the Danish giant already seems to have turned the situation around, with LEGO enjoying a far brighter December (no prizes for guessing why) and an improved 2018 thus far. The company is also enjoying plenty of growth over in the Asian market.
Many would perhaps assume that by successfully branching out into the world of cinema, LEGO's profits would have taken a sharp turn upwards thanks to both box office income and increased exposure. After all, it certainly worked for Marvel. However, this doesn't seem to have necessarily been the case. After cutting 1400 jobs last September, the company's chairman actually suggested that diversifying the LEGO brand had added a harmful element of complexity to its business and went on to imply that the focus needed to be returned back to humble brick itself.
As such, LEGO's recent misfortunes may spell bad news for fans of their cinematic releases. Two further projects have already been announced in The Lego Movie Sequel and The Billion Brick Race - which recently lost its director - but, given the company's financial woes in 2017, LEGO's movie franchise may not reach far beyond that.
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