Lego is left playing catch-up

Even Lego's Star Wars toys failed to compete.

"It is clear that there has not been so much money [left] for us when Pokemon has been the really big number," said Mrs Lykkegaard in an interview with a Danish newspaper.

Lego has warned that it will run up record losses this year - in the range of 300m to 500m Danish kroner, a deep plunge from the 516m kroner ($60m, �42m) surplus of 1999.

Excessive optimism

"After the considerable growth in 1999, we in top management over-estimated sales and our optimism resulted in too many cost-demanding initiatives being initiated," Lego said in a statement.

Lego blames weak sales during last year's Christmas season and during 2000 on what it deems to be generally weak sales in the toy market.

Pokemon on the rampage

However, some industry observers say that this interpretation should be taken with a pinch of salt.

Overall toy sales have remained strong, they say, but in some markets children and their parents are redirecting their spending power.

While Lego's sales in Scandinavia remained strong, the Danish toy maker lost lost out to electronic toys and to Pokemon in the UK and the United States.

Harry Potter to the rescue

Lego is gearing up to take on the Japanese Pokemon figures, hoping that children will eventually get bored with cuddly but ferocious cartoon characters.

The company expects to bounce back in 2001 and reach profits of DKr 500m once again, as it makes Lego's products more electronic.

In addition, Lego will launch its new secret weapon, a new range of Harry Potter merchandise.

"Who knows, perhaps it will be us who comes up with the next craze," Mrs Lykkegaard said.

Job losses

But first, Lego will reduce its workforce by 300 people in an effort to control costs. Most of the jobs will go in North and South America.

This brings the total job losses at Lego to 1,500 in two years. The first round of redundancies happened in 1998, after Lego suffered its first deficit ever.

Toy of the century

The Danish toymaker's dive into the red comes soon after the colourful interlocking Lego bricks beat Action Man, the teddy bear and Barbie to be chosen by the British toy industry as the official Toy of the Century in January this year.