In 2003, LEGO was losing nearly $1 million every day and faced total bankruptcy.

By 2003, LEGO reported a staggering pre-tax loss of approximately $240 million, which equated to losing nearly $800,000 to $1 million daily. The company had diversified too quickly into non-core markets like jewelry, clothes, and theme parks. This expansion diluted the brand and led to a massive internal crisis where the company was essentially running out of cash to pay its debts.A major technical issue was the explosion of unique brick pieces. The number of individual LEGO elements had ballooned from 6,000 to over 12,000, which complicated logistics and spiked manufacturing costs. Many of these pieces were used in only one set, making production incredibly inefficient. The company was also struggling to compete with the rise of digital entertainment and video games.Jørgen Vig Knudstorp took over as CEO in 2004 and implemented a 'back to basics' strategy. He slashed the number of unique pieces by half and sold off majority stakes in the Legoland theme parks to Blackstone Group for about $460 million. This provided the necessary liquidity to stabilize operations. He also focused on high-margin licensed products like Star Wars and Harry Potter.The internal 'Bionicle' line also played a pivotal role in the recovery. It was one of the first LEGO themes to feature an extensive original lore and story, which captured a new generation of fans. By 2015, LEGO's revenue had grown to roughly $5.2 billion, officially making it the most profitable toy company in the world. This turnaround is now studied in business schools as one of the greatest corporate recoveries in history.