Lego is cutting 1,400 jobs -- or 8 percent of the company's global workforce -- to revamp the business after its sales fell for the first time in 13 years.
“We have now pressed the reset button for the entire group,” executive chairman Jorgen Vig Knudstorp said.
This is the first time the Danish company has faced falling sales since a near bankruptcy in 2004. Revenue dropped 5 percent in the first six months of the year, to $2.4 billion, primarily as a result of weaker demand in markets like the U.S. and Europe.
Some of the company's classic toy lines like "Lego City," and products associated with "The Lego Batman Movie" did well. But revenue from other lines didn't do as well.
The company said it needs to simplify its business model in order to reduce costs.
"We have added complexity into the organization which now in turn makes it harder for us to grow further," Vig Knudstorp said.
Lego has been adding new businesses as the company tried its hand at ventures like films, but Vig Knudstorp insisted, "The brick is the heart of our business."
The company said it expects to make cuts before the end of 2017.
The Associated Press contributed to this report.