LEGO's profits soar again

 

  • LEGO's profits soar again

    Posted by Huw, 11 Sep 2010 15:55. Filed under Brickset.

    Perhaps the most significant story to emerge this week, which I haven't seen mentioned on other LEGO fan sites, is that LEGO has again announced increasing profits this half-year. 

    "Strong sales of Lego Atlantis, a Lego version of the mythical lost undersea city, helped the Danish toy-maker report a 34pc increase in sales over the first half of its financial year." reports The Telegraph while Toy News says  that Lego Prince of Persia has been "extremely well received" by consumers which surprises me somewhat given the way it was reduced here in the UK very shortly after release.

    I suspect the hike in prices across the board has contributed to this profit, too. But, of course, it's far better for the company to be healthy than making a loss to ensure its longevity.

    So, well done Mark S, designer of some of the Atlantis sets, for directly contributing to the company's profits. I hope they give you a raise :-)


    44 comments, latest one posted 33 months ago. (Commenting has ended on this article)
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Comments

Posted by Bodyguards17 in United States, 11 Sep 2010 16:10

it is doing good now, but wait until that lego jewelry comes out and Harry Potter is gone.

Posted by Firox 5000 in United Kingdom, 11 Sep 2010 16:17

Well it's good to see lego have had their third healthy year ina row. The only problem is seeing good sales I hope they dont raise their prices again next year. Some of the old sets e.g police headquarters have had as much as £20 added on to it since first released.

Posted by Pulpdiction in United Kingdom, 11 Sep 2010 16:28

These profits are clearly so pronounced due to the significant price hikes of recent product releases. Every new incarnation of an old set, police station, fire station etc, seems to add on 10/15/20% and the price per part is nearing 10 pence for a lot of sets, which is not sustainable. I think lego could achieve equally substantial increases in profit through volume rather than price increases if the prices were actually help for a few years. Many retailers are not actually passing on the price increases and some sets seem to have gone up within months of being released, so effectively doubling the effect of the replacement increase (although I am mainly talking about replacement line rather than like for like here, eg, not police station for police station but creative for creative - houses for example).

Posted by SillyQuack in United States, 11 Sep 2010 16:32

I hope LEGO chooses to use some of its profits to make higher quality parts again.

I'm tired of cracking Torsos and gaps in bricks.

Posted by Ypres in Canada, 11 Sep 2010 16:36

Funny how Americans complain about money! Canadians have to pay as much as 25% more for their lego... and our dollar is still very close to the American one. When I went down to San Diago this summer I felt rich.

It's no surprise Lego gets higher sales. Their themes are great, and customer service even better! Lego is a company that doesn't let its size go to its head... every buyer is still valued. I still plan on making an Atlantis purchase. Much like Prince of Persia, Atlantis has great parts.

Harry Potter sales will do further good, however if there is any chance Pirates.o.t.C rumours being true then Lego will make BIG money.

Posted by Alemas in Germany, 11 Sep 2010 17:02

Good to see LEGO is still doing well! Despite the credit crunch, it's still making LOADS of money! But why is LEGO "anti-credit crunch"?

Posted by i like guitars in United States, 11 Sep 2010 17:21

I have a fear that they will start having sets manufactured in china and the prices will either stay the same or raise

Posted by Alemas in Germany, 11 Sep 2010 17:26

@i like guitars: Nah, currently the bulk of manufacture takes place in Denmark and Czech Republic. LEGO parts production in China is small. :)

Posted by Superkalle in Sweden, 11 Sep 2010 18:01

Very strange that they say that Prince of Persia was well received. The dealers I've talked to here in Sweden says it's a disaster. And I can understand why - the movie came and went faster then lightning, the game it's based on was popular many years ago - those kids are beyond Lego now, and the play value of the sets is mediocre.

Posted by kazooie_pack in United States, 11 Sep 2010 18:04

so....does this 'healty fincancial year' mean a drop in lego prices? I really hope so, cause i was looking at the cost of sets back like 5 years ago, and it's increadable how much the price has gone up.

Posted by legomaniac in United States, 11 Sep 2010 18:11

Great to hear. Im glad LEGO can make a profit in a time where even big businesses struggle

Posted by 1265 in United States, 11 Sep 2010 18:51

@superkalle10

I agree...PoP was more a miss than a hit. Nonetheless, I like the PoP sets.......nice figures and some great parts. Hope for a blowout sale on them so I can pick up more.

Posted by legoDad42 in United States, 11 Sep 2010 18:54

Great news to hear...maybe they'll make prices of non licensed sets lower, the way they should be?

Also like many posters above, I'm so surprised they said Prince of Persia did well (maybe it's due to the parts so many MoC'er's love). My local LEGO Store says sales are terrible on that line. No one cares about it except for the $10.00 range sets. Even Target had it marked down at one time earlier this year.

Posted by aaronptrck in United States, 11 Sep 2010 20:10

David Beckham's little blurb on the Taj Mahal must have contributed to some degree ($300/set and the popularity for the set jumped 633%!)

I know many US builders complain about the price of LEGO, but in all reality I feel the prices are fair for what you receive. For a toy that is as complex (as in all the different pieces) that is NOT made in China I feel the prices are justified. I remember for Easter one year I got this spinning top toy, that you would stack tops on top of each other as they all spun at once.... Broke within 10 minutes of me playing with it. LEGO's never break, and they are built to last!

Posted by Ypres in Canada, 11 Sep 2010 22:21

I'm pretty sure Lego is using their profits to further expand. I mean, aren't good sales the reason more Lego stores have been opening?! Even the first one in Canada!!!

Posted by duilim in Australia, 11 Sep 2010 23:59

@Ypres I agree with you completely!!
Those of you in the U.S. don't know how good you have it in terms of pricing. Our Australian dollar buys 91 US cents currently but what we pay for our sets is so much more, even after the currency conversion. For example, the Clone Turbo Tank here retails for $240 aud, which after conversion is $216 U.S.
Over there though, you can pick up the Clone Turbo Tank for $120 U.S.

In fact, the U.S. is the cheapest place to buy Lego. So please, spare a thought for your Lego friends from other parts of the world =)

Posted by Orange Lemons in United States, 12 Sep 2010 02:08

Hopefully these profits don't go to LEGO's head, thinking about the consistent mark-ups in the U.S. and around the world. A price drop would be nice to see no matter where in the world you're located.

Posted by Doctor Leg O'Brick in United Kingdom, 12 Sep 2010 04:14

Great news for Lego. Over the last few years lego have become a wisker away from droping from one of the best toy sellers to one of the least best toy sellers. It sounds untrue, but when you look at the figures, we may of not been here today if events played out that way.......

Posted by DrDaveWatford in United Kingdom, 12 Sep 2010 04:48

Some great sets, not to mention some recent eye-watering price hikes, mean that this isn't much of a surprise - LEGO's recent resurgence continues.

Posted by copperwonder96 in United States, 12 Sep 2010 05:08

I don't know about the Prince of Persia deal or the Atlantis driving profits. I think SW was the driver in profits. I know that I bought plenty of SW doubles, I didn't touch Atlantis or Power Miners. I bought PoP only when it when for Clearance at Target and now that stuff is mostly gone due to huge mark downs. Maybe I am just missing what the kiddies are getting into like Atlantis. But every time I go to TRU, those sets are always in stock? Not sure what these stats mean, I can tell by Brickset Analysis that most folks want or have SW. Could be that is made up mostly of AFOL's but still, how could Atlantis be driving percentage increase in sales?

Posted by Superkalle in Sweden, 12 Sep 2010 06:47

@1265 - exactly my hope too with super sale :-)

Posted by bluemoose in United Kingdom, 12 Sep 2010 08:40

There are some subtleties in all this ... Star Wars might still be the biggest selling theme, but if it is bringing in the same amount of money as last year, then that theme isn't contributing to the *increase* in profits. What they are saying is that the Atlantis sets are selling better than the sets they have replaced (Agents?), hence bring in more money. Lego have a limited production capability - if they bring out one set, they have to retire another. If they charge more for a set, they will make more money per sale, but the number of sales will reduce; they have to work out the balance to maximise their income. Hopefully Lego will reinvest their profits into increasing their production capacity, which would allow them to find a new balance point, with a lower cost to customers.

Put simply, it's all about supply & demand - Lego's ability to 'supply' is limited, while 'demand' remains strong; in order to optimise their business they have to increase the cost to their customers in order to reduce demand, hence allowing supply & demand to balance again. Demand for Lego usually increases during times of financial troubles - it's seen as quality product that will last, rather than a throw-away toy, so is a better purchase in the long term. We may not like the increased costs, but it isn't 'scalping', it's Lego trying to ensure their long-term viability as a company & as an employer.

Posted by HQuiff in Ireland, 12 Sep 2010 09:05

I honestly think with an increase as steady and rising as theirs they should lower their costs a good deal. I find the prices of sets way too high, even the advent calendars have had theirs prices raised by €12.00 since last year. I understand that in order to keep raking in money they need to keep their prices high, especially if we want them to continue to produce in Denmark as apposed to China. However at the same time they need to think of the rest of us who don't have as much due to the recession.

It's a hard one to hit right, but they have some cleaver minds in LEGO, so I'm sure they can figure something out. Another suggestion would be to keep products on the market for longer, instead of throwing them off a few months after their first release. And themes such as Atlantis would be perfect, especially with their popularity.

Posted by Keep Bionicles in United States, 12 Sep 2010 09:42

I think Lego needs to stop changing good things. We still don't know the true reason for stopping the Bionicle Series but my son is devastated. I know the release says the foreseeable future but how long do we have our children at this age?

Posted by Alemas in Germany, 12 Sep 2010 09:48

@HQuiff: Sheesh, here's your "in-depth" posting again! ;) :D Back on-topic: Yeah, this whole "balance" thing is a SCIENCE! There must be some really clever boffins at LEGO...

Posted by wolfgang514 in United States, 12 Sep 2010 10:25

"I'll bet the 'Increase in profits' is because of the increase of set prices!"

Posted by AZFIREWOLF in United States, 12 Sep 2010 10:42

I think it also has to do with parents. Would you rather have your child playing a video game that makes them become zombies and once they have finished the game they want a new one. Now with Lego if they build the set it is great. The child can take it apart and try to build another mod with the same set. Lego provides hours of fun and hours of enjoyment. Not only for the child, but the parents.

I have friends that have kids that love when they can put the child in a room (usually the living room) and the child is there for hours.

Posted by M-Tron Hero Kodiak in United States, 12 Sep 2010 12:32

I am glad LEGO is doing good. Hopefully that will mean they contiune to make great themes and products.

The only way to advanced is to make profit of some sort or they can not spend money on R&D.

Granted sometimes I look at the prices of the new castle sets and my wallet burns sometimes, but I also know that any lego set I buy now will survive a long time.
Granted if a Pirates OTC comes out..I'll probably go broke for a few weeks.
I am sure that the price of living of employees goes up from time to time (maybe not right now, at least in the US) and thus prices have to reflect that to consumers, or maybe ABS is going up, so many variables.
Untill LEGO does something like, maybe a 50 pieces set cost 50 bucks...Im ok with the prices.

Posted by itsaturkey in United States, 12 Sep 2010 12:43

Bluemoose- i never thought of it that way. cuz like if lego made the sets really low then EVERYONE would buy like 50 so lego has to make a whole lot more.
AZFIREWOLF- LOL or rather shoot zombies :P as much as i'm a Lego fan, i also love Video games, Mostly Halo (which i like because you can build stuctures using blocks, so its kinda like LDD, in fact i made a huge mini fig :P)
Keep Bionicles- LOL i LOVE your name, i still havn't recovered from the ''shock''. even though lego ended bionicles ''story'' their products will remian for a long time, and hopfully my grandsons will be able with them (but thats a long time away)
Any way i went kinda off topic but, being the fourth person to say this, i too dont understand how PoP did so well.
im actually suprised lego did so well, with ending bionicle and IJ. I bet those dang CM wasa one of the main reasons lego did so well. i say ''dang'' cuz i havn't seen a single CM yet.

Posted by Jabba the Taff in United Kingdom, 12 Sep 2010 13:00

With regards to the Prince of Persia aspect, the article I read about it stated that the profits increase was due to many licensed themes based on Hollywood franchises "such as Toy Story and Prince of Persia." You could read this as PoP was not necessarily one of the licensed themes that contributed to the rise in profits. And 'well received by consumers' in the Telegraph doesn't actually imply that they bought any sets!

Posted by Shijima in United Kingdom, 12 Sep 2010 13:09

On Bricklink there are currently 4784 PoP Minifigs, and 848 complete PoP sets. I think resellers are the ones who receieved it very well.

But seriously, the minifigs in the pop set were pretty cool. I havent seen the movie, but I bought almost all of the line, excluding a dungeon/cave/trap(indiana jones looking set) which had mostly duplicates of figs, and was costly because of a light. But the other sets, LEGO camel's and ostriches. I was sold. (a few months later when they went on a sale at TRU)

Posted by tiberium_blue in United Kingdom, 12 Sep 2010 14:00

I may be the exception, but I've spent a lot less on Lego because of disgust at the price increases here in the UK. I think they're hurting themselves in the long-run.

Posted by broomhandle in United States, 12 Sep 2010 15:10

well thats great that lego made a profit. but if they were to lower their prices, it could be a toy for the everyday kid. and not a toy for the rich parents to purchase.

Posted by brickzone in Ireland, 12 Sep 2010 15:24

Good to hear the profitability is continuing - I don't think some AFOLs appreciate there is no absolute guarantee that the Lego company will continue forever or not be bought up by someone less concerned about the existing products.

I think the UK price rises might be mostly currency-related. For a number of years Lego has been cheaper in the UK than the rest of Europe, and even with Sterling since appreciating a bit against the Euro, it still didn't make up the price difference. Recent UK prices are about the same as Eurozone when you do the currency conversion. It is hard to see which of the Euro, Dollar or Sterling is on more shaky ground (different factors against each) but it is possible that UK prices now include a hedge against Sterling dropping in value.

Unfortunately it seems to mean higher Irish retail prices too, whether because Irish toy outlets were having to compete with UK online or Northern Ireland shopping, or just because they were using distribution based in UK. Until recently we seemed to have better in-store prices than in the rest of the Eurozone (even if the S@H prices are second-highest after Finland).

Posted by goldfish in United Kingdom, 12 Sep 2010 17:40

This simply reconfirms my view that the licences are absolutely vital in the modern market place. It's clear to me that the Star Wars licence is driving the profits, but alongside this there is a potential concern, in that the cost of some of the Star Wars sets, and the price per brick are getting very high, presumably because of the royalties/licence cost they need to pay. One thing I really don't like is the huge boxes that have about 20% of the space filled inside. I think this is deceptive and unnecessary. I mean do some of the sets like Cad Bane's Speeder with just 318 pieces, really need to be £44.99?!
As for Price of Persia, it's completely anecdotal on my part, but I think it's been poorly received, and will go very quickly. Prices on the sets are discounted already.
On the flipside, I expect Potter to do quite well from October...but not as well as Star Wars of course.

Posted by Captain Blockbeard in United States, 12 Sep 2010 21:37

Glad to know Lego is doing well, but I fall into the category of people who frequently complain about Lego's recent pricing, made worse by the additional markups at my primary location for Lego purchases: TRU. It's sad when I can walk down the Lego aisle, pointing constantly here or there, and say "this should be $5 less" or "that should be $3 less."

A mystery to me is the reception of Prince of Persia (both the film and the Legos). The movie was never advertised as a video game tie-in movie and it fit appropriately into the summer blockbuster season. Similarly, I was surprised at how early and how often local stores put the PoP Lego line on sale. It was to my advantage since I bought many of the sets, thinking that PoP filled a gap in the Lego universe (Near East culture, albeit fantasized here). With the questionable success of this line, I look to the future with the eventual Pirates of the Caribbean theme with wonder.

Also, it's amazing how successful Lego is despite regurgitating the same themes and subthemes year after year. I know they have to cater to new generations of children begging grandparents in the Lego aisles of toy stores, but wow, Lego is supposed to be a name synonymous with creativity and originality. Psst... If you have to keep on reviving old themes, Lego, please give us Blacktron 3 in 2011 or Ice Planet 2012!

Posted by Lego Lord Mayorca in United States, 12 Sep 2010 21:40

For all those that complain about the rather high cost of Lego, in the USA and abroad, I find it ironic that the majority of you will STILL buy it, regardless of the cost. That is why profits are so high for them; people keep buying in spite of it all. Lego is very good at making a quality toy, as we all know too well. They know that if they make the right stuff (i.e. Star Wars, collectible mini-figures, etc.), they can charge whatever they feel like is good for them and rest assured that we AFOLs will STILL buy it, even while complaining online of price hikes, occasional drops in quality, or Chinese factories. I mean, look at those bloody collectible mini-figures for example! They're made in China with that horrid-looking plastic, yet everyone goes gaga over them because they look SO amazing and are so unique. I won't lie; even I fell for this and snatched up 8 of the first series, but after having them in person, I was able to make a judgment call and rationalize that they were not worth the price for me personally. Which reminds me: we as AFOLs and consumers must be wary of this kind of behavior, lest Lego figure out it can get away with making more products that look really really ridiculously good with less and less of the standard quality we've come to expect. All in all, this news from Lego is excellent. I do hope this leads to more amazing things from my favorite toy company, including possibly new TRON-based sets (2012 please!) and more Lego Stores!

Posted by voypro in United States, 12 Sep 2010 22:44

RE: Prince of Persia is will be this years 1/2 off Christmas / after thanksgiving day sales. we all know it.
It was a said attempt at a license product. It is cool only in the sense that is has that castle feel to it.

Posted by legobob in United States, 13 Sep 2010 07:09

well this is good for lego

Posted by legoDad42 in United States, 13 Sep 2010 13:48

@Lego Lord Mayorca...I purchase LEGO on sets and kits that I feel are fair prices based on piece count and of course design is the first priority. I complain about prices but to be fair (I have a couple of brickset Lists on that), LEGO has a nice range of small cheap prices, fair and moderate and then some that are waaay over the top. I only complain on the way over the top prices like say a Slave I, or some non-licensed sets that they charge too much. I even think Duplo is too much....so I'll use my ViP points on something like that to keep the cost down. Or I purchase through eBay on larger sets and get great deals (I have good sellers I keep on file) and always look for sales at Target and Walmart where I've gotten some large kit's with 20- 30% off sales.
But I know we all can agree (except maybe on the mini-figs)that LEGO is a high quality toy and is a great, fun hobby...;) And you're like me...definitely looking forward to a TRON line.

Posted by Captain Blockbeard in United States, 13 Sep 2010 17:35

@ Lego Lord Mayorca - I can't speak for anyone besides myself, but I haven't bought a single Lego set within the last year for full price. I wait for sales, be they 20% off, 25% off, or BOGO 50% off. At full, original prices, Legos are beyond my willingness to pay.

Posted by 1265 in United States, 13 Sep 2010 19:06

@ Captain Blockbeard - I love sales to and pick up many sets (plus multiples) when items go on sale. However, it's not common to see exclusive, lego.com, and lego only store sets to go on sale. Wish more did....but I pick them up before being being discontinued all of a sudden. It's true that a great deal of international buyers pay a higher amount when compared to the Dollar.

Posted by CharlieTheFunEngine in Australia, 14 Sep 2010 03:35

Great to hear. Long live LEGO!

Posted by LEGOCityManiac11 in United States, 16 Sep 2010 18:29

Go LEGO?

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