Subject:
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Re: LEGO reports improved financial results
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Newsgroups:
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lugnet.lego
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Date:
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Fri, 8 Apr 2005 07:17:04 GMT
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Viewed:
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5650 times
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In lugnet.lego, Kelly McKiernan wrote:
> It would be very nice to hear a balanced, honest analysis of what this REALLY
> means for LEGO in the long run. No doom-n-gloom chicken little, no corporate
> happyspeak spin.
>
> Anybody here volunteer? ;)
Very tricky. I have gone through the annual report - but its not clear whether
what's happened is the start of a long contraction down to a niche player or
more of a once-off adjustment that's a foundation for modest growth.
A couple of interesting points from the annual report.
- gross margin is much healthier. This implies that Lego is selling less at
clearance prices and more at full price and that costs are being reduced
- cash flow looks much better
- investment has been reduced dramatically
- the % value of licensing fees to revenue didn't fall as I was expecting it
to. (and currency issues cloud that number)
Increased gross margins on slightly lower revenue in a flat market is a good
start. The current strategy of focusing on core lines rather than the old
strategy of broadening the brand seems to be improving the numbers.
But an annual report for a privately held company is never as informative as one
would wish.
The annual report doesn't answer the following questions:
1. Can they thrive in a smaller form - like Brio or Playmobil? Will there be
enough revenue to cover Lego-size R&D costs?
2. How representative are the anecdotal stories of shrinking retail shelf space
for Lego? Are the competitors increasing the shelf space share?
3. Has the toy market changed too much for Lego to adjust? Do kids want mobile
phones more than construction toys? Has the growing faddishness of the toy
market invalidated Lego's R&D model? Will Bionicle suddenly become "yesterday's
toy" and if so does Lego have another winner waiting in the wings?
Want more detail Kelly?
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Message has 1 Reply:
 | | Re: LEGO reports improved financial results
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| (...) - much good stuff snipped - That's a good analysis, thanks for taking the time to write it up. (...) This would be an interesting one for them to address publicly. You're right, it's all been anecdotal, although I know that I've seen it as (...) (20 years ago, 8-Apr-05, to lugnet.lego)
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Message is in Reply To:
| | Re: LEGO reports improved financial results
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| (...) Boiled down, I think it comes to: "Last year wasn't quite as bad a stinkburger as we thought. Kinda." It's the type of document that can be taken both ways. Improvements are definitely happening, which is good news; but they still lost more. (...) (20 years ago, 7-Apr-05, to lugnet.lego)
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