the 06/01/2008

Brio Plans to Revive Earnings With Interactive Toys

May 22 (Bloomberg) -- Brio AB, the unprofitable Swedish toymaker whose chief executive officer quit last month, will introduce products at a record pace this year in an attempt to revive sales growth, Chairman Daniel Sachs said.

Brio, the maker of wooden toy-train tracks and pull-along model dachshunds for more than half a century, will introduce 70 new toys in 2008, including interactive games and children's furniture, Sachs said in an interview in Stockholm.

The toymaker is down 34 percent in Stockholm trading this year and has lost 70 percent over two years. Proventus AB, the Swedish investment company led by Sachs, bought 30 percent of Brio in 2004 for 90 million kronor ($15 million) and has since cut about 130 jobs, closed shops and moved some production to China. Brio had a net loss of 82.6 million kronor last year as it lost sales to computer games and cheaper plastic toys.

``Brio's problem, long before we came into the picture, was that if you're not innovative and develop new products they become generic,'' Sachs said on May 20 at Proventus's headquarters. ``The first thing we did was to start to put a new organization in place that had an understanding of consumers.''

 

Sales fell 16 percent last year, the second straight decline. CEO Thomas Braeutigam said April 7 he'd leave next month after 3 1/2 years. Sachs wouldn't say why Braeutigam resigned. The company has a market value of 281 million kronor.

``Brio is a big name,'' said Lena Hedoe, who heads the Stockholm-based Swedish Toy Shop Owners Association. ``It's had a dull development in the past years and that has worried many toy shop owners.''

Interactive Toys

The product range targets children aged three or less. The new set of interactive toys that goes on sale later this year is aimed at connecting children with their parents through building, touching and listening, Sachs said. The products have proved popular at industry fairs, he said.

Brio traces its roots back to Ivar Bengtsson, who started selling woodchip baskets in the late 1870s before he expanded to more than 100 products and toys by 1900. Brio grew into a company with more than 150 employees by the 1930s.

The company sells its toys in 50 countries worldwide, and is negotiating with distributors to widen the network, Sachs said, declining to provide details. About half of sales come from toys, and the other half from products such as strollers and car seats.

Sachs said he plans to strengthen the division making baby products and compete with producers including Teutonia of Germany or Bugaboo from the Netherlands.

``Before we invested in Brio we realized it was going to be a long process that you need to have patience with and we're somewhere in the middle of it,'' Sachs said. ``We believe there is big, long-term potential.''

To contact the reporter on this story: Janina Pfalzer in Stockholm at jpfalzer@bloomberg