Agent Kallus Posted September 5, 2017 (edited) https://brickset.com/article/30409/lego-group-s-profits-take-a-plunge Thoughts? I think that this doesn't bode well but feels like an overreaction on TLG's part (but I am not an economist). I hope this doesn't mean a reduction in green energy polices and the like. Edited September 5, 2017 by AgentKallus of Hydra spelling Share this post Link to post Share on other sites
Mesabi Posted September 5, 2017 Here's the original press release, which I got off of reddit https://www.lego.com/en-us/aboutus/news-room/2017/september/interim-results/ I don't know what to think. We could blame it on new molds, high costs of Lego, or a change in the market, but I think only Lego knows. I just hope they figure it out. Hopefully those 1400 people do okay. Share this post Link to post Share on other sites
Aanchir Posted September 5, 2017 "Economic woes" is probably overstating things. Profits and revenues are still higher than they were at this point in 2014, it's just that at that point those numbers were growing and now they're not. As such LEGO can't keep running their business the same way they did when their profits were climbing year after year. I feel bad for the employees who will be laid off, but if LEGO was taking on a lot of new employees and expecting rising revenues to balance out the added costs, then I understand them having to dial back. For reference's sake, in their 2016 interim result they mentioned having hired 3500 new employees in the past year, growing their workforce by 24%! Whereas they're only now reducing their workforce by 8%. Hopefully the employees who lose their jobs this year will not have too much trouble finding stable and rewarding employment elsewhere. Share this post Link to post Share on other sites
quark12000 Posted September 5, 2017 Their net profit dropped from DKK 3.5 billion to DKK 3.4 billion. Oh woe is Lego! Gimme a break. Share this post Link to post Share on other sites
danth Posted September 5, 2017 Total speculation: Improved automation technology is allowing Lego to eliminate 1400 jobs. It's better PR to blame the layoffs on a drop in profit, however tiny. Share this post Link to post Share on other sites
dr_spock Posted September 5, 2017 What type of jobs are being laid off and where? Share this post Link to post Share on other sites
Vorkosigan Posted September 6, 2017 I think the layoff is not so much about the loss in profit in the short term as about what it is believed to signify. They have been growing fast for a while, it looks like LEGO may have peaked and be starting a down slope so they need to plan for that coming dip instead of continuing growth. Share this post Link to post Share on other sites
Agent Kallus Posted September 6, 2017 This was mentioned in the metro (British free news paper at train stations) today but at the end it stated that (in the UK I presume) Lego's best selling product lines were City ,Technic, friend and The Lego Batman Movie. On 05/09/2017 at 5:03 PM, Aanchir said: "Economic woes" is probably overstating things. Maybe but it sounds better than any other title I could think of. Share this post Link to post Share on other sites
Faefrost Posted September 21, 2017 On 9/5/2017 at 12:03 PM, Aanchir said: "Economic woes" is probably overstating things. Toys R Us just filed for Federal Bankruptcy this week. At least the US and Canadian stores did. The European ones are owned by a different company. Woe's might be understating things, depending on how much money they owe Lego? Share this post Link to post Share on other sites
Lyichir Posted September 21, 2017 25 minutes ago, Faefrost said: Toys R Us just filed for Federal Bankruptcy this week. At least the US and Canadian stores did. The European ones are owned by a different company. Woe's might be understating things, depending on how much money they owe Lego? Toys R Us declaring bankruptcy is not a great development for Lego, but it's also a development that basically affects the whole industry. If anything, Lego might stand to lose less from that than its biggest competitors (Mattel and Hasbro), both of which are publicly traded and have taken a hit in the stock market over the news. Share this post Link to post Share on other sites
Faefrost Posted September 21, 2017 13 hours ago, Lyichir said: Toys R Us declaring bankruptcy is not a great development for Lego, but it's also a development that basically affects the whole industry. If anything, Lego might stand to lose less from that than its biggest competitors (Mattel and Hasbro), both of which are publicly traded and have taken a hit in the stock market over the news. Of the major toy players Lego is better positioned than Hasbro or Mattel. Hasbro in particular is I think way to extended into TRU with far too much exposure there. Plus they have been getting battered and bloodied in other areas. Of the big players Lego and Bandai are probably in the place of the least damage. Still not a good place to be. And no matter how you slice it Lego has an awesome amount of real estate in each and every TRU store. That equates to major exposure and loss. Share this post Link to post Share on other sites
koalayummies Posted September 21, 2017 Excellent points, Lego is owed nearly $29 million from TRU while Mattel and Hasbro are owed $135 million and $59 million respectively and also probably need TRU the most. http://www.northjersey.com/story/money/2017/09/19/toy-manufacturers-owed-millions-toys-r-us/681485001/ Another article I was reading stated that TRU supply vendors including Lego will still be keeping their product delivery commitments for the holiday season. Share this post Link to post Share on other sites
Faefrost Posted September 22, 2017 Interesting list. Lego looks to be much better positioned than I thought. $29 Million in TRU debt is not bad. It actually looks like very very conservative lending and inventory policies, considering how much product Lego has in the stores and what their total sales are. As a counter point look at "Spin Master" at $32 million. $29 mil is probably around 1% of Lego's annual sales. Yeah 1 point off margin is harsh. But not that damaging. But does anyone think Spin Masters product lines are that broad and profitable? TRU is probably holding 20-30% of their annual revenue. I can't see Hatchimal's or even Air Hogs doing more than $100-150 Mil annual? The same thing with Just Play. If TRU owes you more than they owe the #1 Toy Company, you have likely overextended how much credit you've been giving them, and you are boned! Graco, Hasbro and Mattel are all Billion $ outfits. It will hurt but the only really worrying number is Mattel. That's a harsh amount of exposure there. Mattel, maker of Barbie, Hot Wheels and other toy brands, owed $135.6 million Hasbro, which owns the Star Wars license, owed $59 million Graco children's Products, car seats and baby gear, owed $59 million Spin Master, Hatchimals, Air Hogs, owed $32.7 million Lego, building blocks, owed $28.9 million Just Play, Care Bears, dolls, licensed toys, owed $28.9 million MGA Entertainment, Bratz, Little Tikes, owed $21.6 million VTech electronics, learning toys, owed $17.7 million JAKKS Pacific, costumes and various licensed toys, owed $14 million Radio Flyer, Wagons, bikes, play cars, owed $12.2 million 12 hours ago, koalayummies said: Excellent points, Lego is owed nearly $29 million from TRU while Mattel and Hasbro are owed $135 million and $59 million respectively and also probably need TRU the most. http://www.northjersey.com/story/money/2017/09/19/toy-manufacturers-owed-millions-toys-r-us/681485001/ Another article I was reading stated that TRU supply vendors including Lego will still be keeping their product delivery commitments for the holiday season. They don't have much choice. Payment for the holiday stuff is now guaranteed by the court. And where else are they going to sell the stuff. The vendors aren't going to take a massive holiday hit. This is part of why TRU likely filed now. If they had let it go they would have risked inventory problems as vendors got scared about being paid for holiday merchandise. But rest assured TRU will not be getting "very best customer" finance rates from any of them. Many of the smaller vendors will be in a very tight spot and may not continue to ship. Mattel, Hasbro, Lego and Graco as examples will play nice as that helps to keep them in the Judges good graces as mission critical vendors, so likely to be near the top of the outstanding bills paid. Share this post Link to post Share on other sites