Subject:
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Re: Official statement of the LEGO Group in reply to Wal-Mart Canada no longer selling LEGO products
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Newsgroups:
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lugnet.general, lugnet.loc.ca
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Followup-To:
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lugnet.loc.ca
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Date:
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Wed, 13 Feb 2008 14:46:10 GMT
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Viewed:
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2553 times
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In lugnet.general, Kirk Backstrom wrote:
> As you may have already heard, Wal-Mart Canada is no longer carrying LEGO
> products. The official statement of the LEGO Group regarding this situation is
> below.
>
> LEGO Group statement on developments in Wal-Mart Canada
>
> A recent discussion of pricing strategies, in light of the Canadian Dollar’s
> strength, prompted Wal-Mart Canada to de-list the world’s leading construction
> toy brand’s products from its shelves starting in January 2008.
>
> The loonie’s increased value against the US Dollar prompted questions as to the
> disparity in LEGO product pricing between the United States and Canada. With
> headquarters in Europe, the LEGO Group reports its financials in Danish Kroner,
> and maintains a manufacturing cost base fixed in Euros. It is therefore
> erroneous to look to U.S. pricing as a means of measuring anticipated Canadian
> price equivalencies. The prices of LEGO products vary around the world, and are
> determined by careful evaluation of local factors such as government taxes,
> transportation costs, exchange rates, market conditions and the cost of doing
> business.
>
> The European-based LEGO Group has actually seen its profitability erode by the
> recent currency market dynamics. Wal-Mart Canada requested Canadian pricing
> more closely aligned with U.S. pricing, which, for the stated reasons, would
> therefore make LEGO business unprofitable in their stores.
>
> “We do everything we can to deliver the best possible quality, value and play
> experience for consumers at the best possible price in all of the 130 countries
> where we do business,” said Søren Torp Laursen, president, LEGO North America.
> “Historically, the LEGO Group has not changed retail prices as local currencies
> fluctuate, and recent developments in the Canadian dollar have not dramatically
> altered the fixed costs of doing business in Canada from Europe. Wal-Mart asked
> us to significantly drop the price of LEGO products as a result of the loonie’s
> current strength, to more closely match U.S. prices, to which we cannot
> favorably respond while maintaining a profitable business.”
>
> “Of course, this is a very disappointing development in our longstanding
> relationship with Wal-Mart Canada,” continued Laursen. “We are in constant
> dialogue with Wal-Mart on this issue, and we hope to eventually bring LEGO
> products back to Canadian consumers through Wal-Mart stores, but we are unable
> to do business on the current requested terms.”
>
> (Source: John Lotenfoe, Assistant Marketing Manager for LEGO Canada.)
So if the Euro is the standard, why are not US prices increasing based on the
USD losses against the Euro? Is not LEGO losing profitability in the US due to
the much weaker USD?
Jude
X-FUT .loc.ca
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