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Industryweek 9635 Lego Christmas Tree

Lego Shortage? Santa May Need a Plan B

Oct. 21, 2015
Shoppers in Europe could face empty shelves as the toymaker struggles to meet high demand.

COPENHAGEN, Denmark—Toymaker Lego on Wednesday warned it may be unable to deliver all European orders in the run-up to Christmas due to strong demand, meaning some shoppers could face empty shelves.

"When we get new orders we will face a challenge in some markets in Europe to ship those orders to the stores," spokesman Roar Rude Trangbaek told AFP.

"This comes on top of a first half of 2015 where we really outperformed our expectations for how sales would develop," he said.

All orders already placed by retailers will be delivered, he added.

The privately held group declined to say which product ranges could be affected or how much of its annual revenue comes from the Christmas shopping season.

Around 60% of Lego's annual consumer sales typically are yet to be made at this time of the year, Trangbaek said.

"We can't guarantee that parents can go into any toy store and find specifically the product they are looking for. They may have to search another store before they can find it," he said.

The Billund-based group has outpaced the rest of the toy industry for several years, defying the rising popularity of electronic games.

"If it were any other company, I would be quick to dismiss it as a marketing gimmick," Sean McGowan, an analyst at US investment bank Oppenheimer, told AFP.

Lego, whose brand was named the world's most powerful this year in a survey by consultancy Brand Finance, doesn't "'do' insincere," he argued.

After posting "surprisingly strong" results in the second half of last year "it would have been genuinely prudent to expect demand to be possibly lower this year... As it turns out, demand is very strong," he said.

The group plans to step up production by investing "significantly in factories in Mexico, Hungary and Denmark" until 2022, it said.

"We anticipate welcoming thousands of new employees to the group as we continue to expand our global presence," chief financial officer John Goodwin said in a statement.

Figures released in September showed that first-half revenue increased 23% to 14.1 billion kroner (1.89 billion euros, $2.15 billion), putting the Danish company ahead of its US-based rivals Mattel --maker of Barbie--and Hasbro, whose products include the Transformers toy line.

Net profit grew 31% to 3.55 billion kroner, making it more profitable than its two competitors.

The Lego City, Technic and Star Wars lines were among the most popular in the period, while new launches such as Jurassic World and the girl-focused Lego Elves "were received very positively," the company said.

Lego was founded in 1932 by carpenter Ole Kirk Kristiansen, who in 1934 gave it its current name, an abbreviation of the Danish words "leg godt," meaning "play well."

Copyright Agence France-Presse, 2015

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