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LEGO Profits Up 32%

Posted by Jamit 
LEGO Profits Up 32%
February 24, 2009 02:33AM
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Not sure how much we can trust this bit of news, but if true it really is amazing for LEGO. Its also slightly concerning to me. But I'll save my rant for the podcast. winking smiley

Lego profit builds by 32%

Quote:
COPENHAGEN — Danish toy maker Lego on Monday said profit rose 32 per cent on strong sales in 2008 despite a slowdown in the wider toy industry.

Net profit for 2008 was 1.35 billion kroner ($232-million U.S.), up from 1.03 billion in 2007.

Sales of Lego's plastic building blocks rose 19 per cent to 9.53 billion kroner from 8.03 billion kroner the previous year.

The family-owned group does not release quarterly figures.

Lego said it saw strong sales in its City, Star Wars and Indiana Jones product lines, even though the global toy market declined because of the economic downturn.

The Billund, Denmark-based company said it expects moderate sales growth in 2009 despite the worldwide recession.

“Our optimism is supported by the results seen in the first months of the year,” Chief Executive Joergen Vig said.

Though the company is not publicly listed, it has published earnings reports since 1997.



[radio.laml.org]
Re: LEGO Profits Up 32%
February 24, 2009 04:11PM
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More news on this:

Lego to increase spend after record profits

Quote:
LONDON - Lego is planning to increase its marketing spend after posting a 51% increase in British sales.

The company's UK managing director Marko Ilincic told The Times that marketing spend would be increased by nearly 30% this year to help build market share.

However, a spokeswoman for Lego played down the report, telling Brand Republic she did not recognise the figure. She stated that the toy company will use TV, online and social media in the coming months. It will also carry on sponsoring the Cartoon Network.

The Danish toy company has bucked the economic downturn to claim a 3.3% share of the UK toy market. The sector has seen a 2% slump in sales as parents tighten their purse strings.

Jorgen Vig Knudstorp, chief executive of Lego, said: "Despite gloomy economic prospects, we feel well prepared for growth in 2009 and our optimism is supported by the results seen in the first months of the year."

The spokeswoman highlighted that the brand has appeal during a downturn, as parents turn to more traditional, dependable products rather than more faddy items. She said: "We see in times of economic gloom that parents look for brands that can be trusted. Lego is a toy that can be turned to time and time again. That shines through."

Among the highest selling products in the Lego range were the Star Wars line, the new Indiana Jones range and the Lego City toy range, aimed at boys aged four to seven.



[radio.laml.org]
Re: LEGO Profits Up 32%
February 25, 2009 04:11AM
It is 4am in the night so I didn't read all the text really carefully but oes this mean that TLG is about to spend more money on their marketing? Well, I sure hope that their marketing means more events and competitions and less Saturday morning TV advertisements. I really, really hope they don't start to do some wild "let's get to online advertising" ideas with the new marketing money. I just imagine rows of flash-animated freak-shows that tell the kids how the new "LEGO Universe" is place to be. LEGO brand is just so strong that it doesn't that kind of over-promoting..

Of course, this comes from an european 22 year old university student. I am not totally sure what kids these days do in their free time (at least my two cousin's sons build alot). Also, the location might have also something to do with the opinion. USA and Canada might have more competition in the "building brick" department than Finland..
Re: LEGO Profits Up 32%
February 25, 2009 02:16PM
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I think that is exactly what they are going to be doing. More TV spots, more online ads, all that stuff. I personally just want a price drop. They would sell a lot more if LEGO was actually worth the amount you have to pay for it.



[radio.laml.org]
Re: LEGO Profits Up 32%
March 13, 2009 01:44AM
Wow really that amazes me!
Anonymous User
Re: LEGO Profits Up 32%
March 17, 2009 11:50AM
Lego has always been a disproportionally expensive toy, I remember as a kid that my mom weaned me off Lego and got me into G.I. Joe because it was cheaper. However that being said when you buy a Lego set you know what you are going to get quality wise so I understand the fact that it is a little more money than your average action figure, heck its made better than most action figures, however (and forgive the run-on sentence) some of the price points on the Clone Wars sets have been just stupid, and while some sets have been great values we’ve seen a rather large number of those sets that make you say “It’s how much? Why?” (I’m looking at you Farm sets) The price will not drop because the market will allow Lego to set the price at this point, if the market does not allow them to set the price high then they will drop it. I still get most of my stuff when Fred Meyer does 20% off sales so the price hikes have been negligible for me. As far as spending the money on marketing that seems rather stupid, why do you need to market a brand that for the most part is its own toy sector, which even comes close to Lego Playmobile? Megablocks? I don’t think so, if Lego is trying to expand their market share they need to realize that at a certain point you own the market and there is nowhere else to go.
Re: LEGO Profits Up 32%
March 17, 2009 05:07PM
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I suspect that the raised marketing budget will not be to dominate their sector (as you said, they own the building toy niche) but to expand the sector. Perhaps if LEGO is the only company making money in these times, they will be hoping to expand their base and take away from the video game "crowd".

The Clone War set prices are indeed crazy. Thankfully, I was just able to pick up the Twighlight set for 50%. Which is quite a savings when it is regularly $129.99 Canadian. That is the way to do it. smiling smiley



[radio.laml.org]
Re: LEGO Profits Up 32%
March 17, 2009 07:35PM
Guys, don't forget the lisence fees. Every lisence set TLG produces costs more than the "house theme" set because of the lisence. The Star Wars sets have always been more expensive than the other sets.
Re: LEGO Profits Up 32%
March 17, 2009 07:59PM
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They have always cost more, but lately it has reached a price level I have not seen before. For example, the Magnet Set is $19.99 in Canada. I remember the old minifig packs selling for $9.99 Canadian. Isn't that a %50 mark up? And that is with a stronger Canadian dollar...

The Twilight is $119.99, that is a crazy price (even for a Star Wars set). I think LEGO is clearly making milking the Clone Wars sets for all they are worth.



[radio.laml.org]
Anonymous User
Re: LEGO Profits Up 32%
March 20, 2009 03:53PM
TheQ and Jamit, You guys are both right on this isssue. The license fees are indeed a built in expense, but are these fees "per set" or are they for the right to make them period. I was under the impression that the fees, huge though they are, were for the ability to make sets, if this is the case then Lego is doing just fine on recouping (sp?) their investment. I must side just a bit with James here, the sets are getting a little silly in the price points, but I wonder is this sort of expense vs. piece thing spilling over into other themes? I mean isn't Farm a lot over priced? And I must say that the fortress set from the pirates theme was just a tad, (and I mean just) over the limit to. Wonder what you guys think about the set prices in other themes as compared to Star Wars.
Thanks!
Jason
Re: LEGO Profits Up 32%
March 20, 2009 09:41PM
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I think what would be really interesting is to do a price brake down based on parts in sets for each theme. As I really don't have any idea how all the system themes compare with price per part. I'll try and look into that for the next show (to be recorded Saturday) and share that information.



[radio.laml.org]
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