Lego reduces margin to grow 50% this year

M. Cassab, Lego's distributor in Brazil, decided to sacrifice profitability to reach the goal of 50% expansion in turnover this year, about 2012. The weakening of the real against the dollar has made the cost of importing the products from Danish manufacturer come up strongly since the beginning of the second half. Michelle Edwards, Chief Operating Officer of m. Cassab and responsible for the Lego brand in the country, said the value that less than half of those expenses were transferred to the final price in stores, so that they do not compromise the sales volume. In their accounts, the losses at the banks will be between four and five percentage points.
This scenario of more expensive imported, added to inflation still high in Brazil, could cause consumers to reduce demand for the toys to assemble, which is why the decision was made.
If reached, the growth rate of 50% will overcome the pace of market expansion of toys this year. The Brazilian Association of toy manufacturers (Abrinq) designs a high sales of 12%, to $ 4.34 billion.
In 2012 the Brazilian retailer has already obtained growth of 50%. Before, the progress observed was, on average, 25% per annum. Edwards assigns the performance to the public's loyalty. "Consumers generally collects the products, what makes ' adopt ' a point of sale and customer loyalty," he said. "The shopkeeper began to realize this, brought more variety to their offerings and the spin of the products began to happen," he added.
To strengthen sales this year, expenditure on marketing and communication are advancing in the same proportion to the goal of billing, according to the Executive. "Our measures include propaganda on TV, merchandising, in-store events and co-promoções," said Edwards. In addition to the investment in new releases: the line of items offered in Brazil was renovated in approximately 84% before 2012.
The opening of exclusive shops of the brand also has contributed to increase the Brazilian operation revenue. The first point was opened in April 2010 in Shopping Cidade Jardim, Sao Paulo, and the second, in January this year in Shopping Rio Design Barra in Rio. The third unit will be inaugurated at the end of this month in Curitiba. "We have to have a whole beware of this format, but he brings the return we expect in building brand and in profitability, too," said Edwards.
Even with the slower progress of the economy, the Executive stated that the Canadian market continues to be important for the Danish company, which tries to capture gains in emerging countries. "They see the Brazil with a very interesting potential for the brand. There is a large portion of kids here who have not yet had the opportunity to play with the products, "he said.
Overall, the Lego grew 25% in net revenue in 2012, to 23.4 billion Danish kroner (approximately $ 4 billion, whereas the average exchange rate calculated last year). Net profit grew by over 35% in the comparison: with 2011, for 5.6 billion Danish kroner.