higher prices leads to record profits

[onions]

http://www.monstersandcritics.com/news/ ... th-results

[blockquote]
Copenhagen - Danish toy company Lego on Tuesday reported a 25 per cent rise in net sales for the first half of 2011, lifted by new and classic products and tie-ins with Hollywood movies.

Net sales were 7.35 billion kroner (1.4 billion dollars), generating an operating profit of 2 billion kroner, the family-owned group said. This compared to an operating profit of 1.47 billion kroner for the corresponding six-month period in 2010.

The group said all its markets recorded double-digit growth with the exception of Japan where the tsunami and earthquake earlier this year slowed demand.

Lego estimated that it had a 7 per cent share of the global toy market.

The results 'have exceeded our expectations on all markets, and the financial result is very satisfactory. But as the bulk of our sales occur in the closing months of the year, it is too early yet to say anything definite about the overall result for 2011,' chief executive Jorgen Vig Knudstorp said in a statement.

Mainstays in the product lineup include the classic plastic building blocks as well as products and tie-ins with Hollywood movies such as Pirates of the Caribbean and Harry Potter.
[/blockquote]

i guess next year we can expect even fewer pieces in the box for the same price. battlepacks will go up to 15 bucks and have only 3 figures. you heard it here first.

[Inzane]

i guess next year we can expect even fewer pieces in the box for the same price. battlepacks will go up to 15 bucks and have only 3 figures. you heard it here first.

And Canadians will continue to get jacked with a premium (vs. US) over an imaginary exchange rate that has no basis in reality.

[GIR3691]

I'm guessing they anticipated higher inflation than actually happened, and were pleasantly surprised that people still bought their product at inflated prices. They better not keep raising the prices though, I've heard a lot of grumbling from parents that LEGO prices are insane as it is. I'm not too happy about the price hikes either.

[youpunk]

I'm guessing they anticipated higher inflation than actually happened, and were pleasantly surprised that people still bought their product at inflated prices. They better not keep raising the prices though, I've heard a lot of grumbling from parents that LEGO prices are insane as it is. I'm not too happy about the price hikes either.

It good news that Lego continues to do well. They have done a great job offering a great range of themes to their customers.

Unfortunately, higher prices have lead me to buy the majority sets I acquire on clearance of 50% or more.

[MrCRskater]

Unfortunately, higher prices have lead me to buy the majority sets I acquire on clearance of 50% or more.

I'm no economist, but I wonder if their profitability affects the number of sales and deals? It seems that over the past few years, sales/clearances have been easier and easier to come by at all LEGO outlets, including TRU, Argos, Target, etc. As profits and production rise, does this create a little more freedom in allowing these bargains?

[Draykov]

Maybe they just had to compensate for LEGO Universe?

Personally, I've bought a lot less LEGO this year than I normally do. If things get much worse in terms of pricing...I can see it biting them in the butt.

[pacific493]

The key thing to watch will be whether they keep up the pressure to squeeze every bit of profit possible out of the brand. Remember, this is a family-owned business and doesn't answer to a group of public shareholders who demand double digit growth year after year in order to stay invested.

[SuperDave]

Personally, I've bought a lot less LEGO this year than I normally do. If things get much worse in terms of pricing...I can see it biting them in the butt.

Same here.

[Mister Ed]

I would've thought the pricing would lead to a drop in sales (I know it, along with a lack of really inspiring Star Wars models in lower price points, has led MY purchases to drop near zero), but either I'm wrong, or the drop is small enough that the price hikes more than make up for it.

[Rook]

Ah let the wallet sodomy begin!

[GIJOE317]

Toys R Us pretty much price gouges the lego market.
In the flyer on the home page, BOGO 50% off all Lego ...

TRU :
LEGO Star Wars Clone Trooper Battle Pack (7913) $14.99
LEGO Star Wars Mandalorian Battle Pack (7914) $14.99

so $14.99 + (50%) $7.49 = $22.48

Target :
$11.99 + $11.99 = $23.98

I'd rather shop at Target, at least the lego hits the reduced sale shelf.
TRU had a Lego Republic Attack Gunship in the bargain bin all taped up
and I was sure it was missing pieces. I told them I'd give them $50 for it ... they said no
I had to pay the sticker price ... and they only took off 25% to begin with.

My wife and I did a K-Mart run in our area because they mis marked some of the Lego
down to $1 ... sadly, most of the K-Marts are now closed in our area.
We picked up all of the Prince of Persia - Hassansins' Hideouts totaling about 20 boxes.
The midi Star Destroyer, some Space Police sets a bunch of Atlantis sets, and
a few Duplo because they were there.

[dWhisper]

LEGO isn't typically the one that's going to eat the markdown of sets, especially in the toy section, where clearance is the norm. There's always cycling and turnover in those sections, by the design of the retailers. They sell sets to vendors at a fixed cost, and may partner on displays and the like, but have sold their goods by the time they ship. I'd be amazed if they took chargebacks on the sets, unless there was something faulty with them.

From the retailer's point of view, there's the SRP that they're most likely locked into contractually, and plans that have to be made based on sales forecasts and overall pricing. So, the profit margin on a single item is scaled across overall sales, what will be left, clearance, returns, etc.

Ultimately, this is basically the same thing that oil companies do to us all the time. They charge more for the product, and our choices are "pay that" or "don't use it." And while that is mostly impossible with oil, it is possible with LEGO. But we don't want to do that, neither do kids. The only way that prices would ever go down is if everyone stops buying. And the likelihood of that happening is fairly low, given the quality of other options.