Lego faces Christmas production block
Last Updated: Tuesday, October 31, 2006 | 11:48 AM ET
The Associated Press
Children hoping to get Lego toys for Christmas may be in for a disappointment.
The Danish toymaker is having a hard time keeping up with demand for its popular plastic building blocks as toy stores stack their inventories for the Christmas season, a company official said Tuesday.
"Many of our most popular products are sold out," Lego spokeswoman Charlotte Simonsen said. "As part of efforts to restructure the company and focus on our core business, we had to make some cuts and the company has not had time to readjust its production."
Simonsen declined to say how many orders had been turned down, but said the restructuring changes had affected the production of Duplo bricks and boxes with Lego City, Star Wars and Lego Technik sets.
The Billund, Denmark-based group has been trimming its staff at home and abroad since starting a restructuring program four years ago. Part of its production and distribution has been moved to countries with lower wages than Denmark, including the Czech Republic and Mexico.
The firm is a major rival of Canada's Mega Brands Inc. of Montreal, which also makes plastic building blocks.
In 2005, Lego sold its four Legoland amusement parks in Denmark, Britain, California and Germany to the U.S.-based private-equity group Blackstone Capital Partners.
Boersen, Denmark's leading financial newspaper, estimated that Lego could lose 750 million kroner ($127 million) because of lost Christmas sales.
The group posted a net profit of 505 million kroner ($86 million) in 2005, compared with a net loss of 1.93 billion kroner in 2004, on strong sales led by its Bionicle line of snap-together creatures.
