Lego earnings hurt by Toys R Us closures
COPENHAGEN, Denmark (AP) — Lego said Tuesday its revenue dipped in the first half of 2018, with business in North America hurt by changes in the retail industry such as the bankruptcy of store chain Toys R Us.
The privately-held company says revenue fell 5 percent to 14.3 billion kroner ($2.2 billion) in January-June compared with a year earlier. Net profit dropped 10 percent to 3 billion kroner ($467 million). The company also blamed the weakening of the dollar. At constant currency rates, it said sales were stable.
Lego says revenue growth in western Europe was in the “low single digits” while it declined slightly in North America. China continued to perform strongly, with revenue growing by double-digits.
“We are especially satisfied with our performance given the challenges of the changing retail landscape, including the closure of Toys R Us,” in the United States, Britain and Australia, Christiansen said.
Toys R Us was hobbled by $5 billion in debt after a leveraged buyout that left it unable to invest and keep up. The company filed for Chapter 11 reorganization last fall and pledged to stay open but had poor sales during the critical holiday season as customers and vendors shied away.
Lego is recovering from a slump in 2017, when its sales fell for the first time since 2004 from record highs.
CEO Niels B. Christiansen said Tuesday the plan “is to stabilize the business,” and said the results “show we’re on track.”
The company does not release quarterly figures.