Friday 31 August 2012

Success for LEGO with Friends Launch

The latest news out of LEGO, showing profit and sales increasing yet again, focused LEGO Friends as the runaway success story of the year. With all of the push that LEGO Friends received as the company seeks to tap into the girl market, who knows to what extent other lines exceeded expectations.  But the news certainly seems to be mean that LEGO Friends has kicked off to a great start.



LEGO Friends received a certain amount of criticism from when it launched for pandering to female stereotypes with all of the pink colours and stables and what not. LEGO had the market research, however, to back up that those were exactly the colours and settings that girls wanted. It seems that the money spent on research and testing paid off, as the press release tells us that “The Group sold twice as many LEGO Friends set as expected” since the line launched. Exhaustively seeking the reaction of the target group has work yet again, after ridiculous success for LEGO with Ninjago and Games in recent years.

Reflecting on the launch of LEGO Friends, Jørgen Vig Knudstorp says:


“LEGO Friends is a result of four years’ development, and it has been amazing to experience the enthusiastic welcome that consumers have given the new range. Sales have been quite astonishing. With LEGO Friends we’ve managed to make creative construction toys more relevant for girls – and we look forward to developing the product line further in the years ahead.”

Knudstorp’s confidence shows that LEGO are taking this foray into the girls market seriously, with Friends presumably poised to be the equivalent of LEGO City – an evergreen brand that can build year on year. It will be interesting to see how the theme is kept fresh each year whilst still focusing on the core characters.

What should be noted is that Friends includes printed parts in several sets, showing an attention to quality that is lacking in other themes. Does this mean that LEGO are aware that creating a durable, long-lasting product will help it achieve success? And if so, let’s get printed bricks back into other sets.


What is surprising in this successful context are reports that the LEGO Friends Advent Calendar will only see tiny distribution in the USA, suggesting that perhaps Friends played better in some areas than others. This is purely speculation, but with the unbelievable popularity of LEGO Advent Calendars it seems a strange opportunity to pass up on.

According to NPD data, LEGO Friends has been the best-selling theme in the UK so far this year, although these figures must be treated cautiously. Although LEGO Friends is being counted as one product, other themes may be being counted as individuals sets. It would seem very unlikely that LEGO Friends could overtake City or Star Wars. These figures also show that LEGO Minifigures have been the most successful toy of the year so far – perhaps this is now yesterday’s success story, as they are not referenced in the press release.

It seems that the care and attention that LEGO took when pouring money and resources into a new theme for girls paid off, and it can only be a matter of time before the inevitable video games, clothing lines and licensed products really start to kick off.

 
Full Press Release

The LEGO Group concludes the first half of 2012 with another very strong set of interim accounts. Net sales for the period were DKK 9,134m compared with DKK 7,355m for the same period last year – an increase of more than 24%.
Operating profit (profit before financial items and tax) for first half 2012 was DKK 2,877m compared with DKK 2,030m for first half 2011, an increase of 41.7%. At the same time the company’s equity rose from DKK 4,565m at the close of the first half 2011 to DKK 6,031m. Cash flow from operations was DKK 2,230m compared with DKK 1,703m during the first half of 2011.

Commenting on the financial result, LEGO Group CEO Jørgen Vig Knudstorp says:
“Once again the first half of the financial year exceeds our expectations, and the financial result is exceptional -   especially in view of general developments in the world toy market. However, it is still too early to provide estimates on the expected result for the full year because the closing months of the year are crucial for our business.”

The LEGO Group’s strong result was achieved at a time when the global toy market is declining – it softened by a further 4% during first half 2012.

Astonishing sales on new products

The year’s big launch – LEGO® Friends, a product line targeted for girls – has done amazingly well since its launch in January. The Group sold twice as many LEGO Friends sets as expected during the first six months of the year. It has therefore increased production to meet the demand for LEGO Friends in the important Christmas period.
  Reflecting on the launch of LEGO Friends, Jørgen Vig Knudstorp says:
“LEGO Friends is a result of four years’ development, and it has been amazing to experience the enthusiastic welcome that consumers have given the new range. Sales have been quite astonishing. With LEGO Friends we’ve managed to make creative construction toys more relevant for girls – and we look forward to developing the product line further in the years ahead.”

LEGO Ninjago, launched in 2011, maintained its success in all markets in 2012, with the ninja theme selling significantly better than expected. Classic lines such as LEGO City and LEGO Star Wars™ are still the LEGO Group’s biggest selling product lines.

Broad global strength achieved

So far the weakening toy market has not had an effect on the LEGO Group, which enjoyed double digit growth rates in consumer sales in virtually all LEGO markets.

The sales increase varies from region to region but is broad based. Sales in European markets rose by an average of just over 10%, while sales in the US increased by 23%. In Asia, sales rose at an even steeper rate, which is a continuation of the picture from 2011. The sharp rise in Asian sales supports the LEGO Group’s long term ambition for making the region one of its core markets in line with Europe and the US.

Boosted by this growth, the LEGO Group increased its share of the global toy market to more than 8% – one percentage point higher than in first half 2011.
Increased capacity and bigger workforce

The LEGO Group has been expanding capacity in all areas of its business in order to be able to meet growing demand. This has taken place in several countries and the development continues in 2012, with the LEGO Group likely to hire approx. 1,000 new employees.



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