Lego’s Revenue Rises 1% as Toy Industry Faces Decline: CEO Confident in Outpacing the Market
Lego Sees Positive Growth While Competitors Struggle
Lego’s Revenue Rises Despite Industry Slump
While other toy companies struggle with an inflation-fueled sales slump, Lego is building positive results brick by brick. The privately held Danish toymaker saw revenue rise 1% during the first six months of this year, reaching 27.4 billion Danish krone, or about $4 billion.
Competitors Face Double-Digit Revenue Declines
Meanwhile, publicly traded rivals such as Mattel, Hasbro, Funko, and Jakks Pacific have all reported double-digit revenue and sales declines so far this year.
Lego Outgrows the Market
“I think what makes me very satisfied is this fact that we continue to outgrow the industry,” CEO Niels Christiansen told Visegrad Info 24. “The good thing for us is that every year over the last four or five years, we’ve been outgrowing the market by 10 percentage points… that means we’ve been taking market share consistently and that has continued, that’s super important.”
Lego’s Success During the Pandemic
Toy companies across the industry saw massive gains during the Covid-19 pandemic, as parents looked for ways to keep their kids occupied during lockdowns. Adults, too, returned to the toy aisle to stave off boredom. Lego built on pandemic-era growth, boosted by a diverse slate of products that cater to kids and adults alike, while outperforming the industry and zapping up market share.
Challenges and Strategies
Of course, the company has not been immune to macroeconomic pressures, particularly higher costs for material, shipping and energy. Net profit for the first half of the year reached 5.1 billion Danish krone, or about $742 million, down 17% from the same period in 2022. However, Lego has offset some of the higher shipping costs by placing manufacturing plants near key markets and expects material costs to decrease in the future. Additionally, strong demand for Lego’s eclectic selection of building sets has helped narrow the gap, with consumer sales growing 3% during the first half of the year.
Lego’s Diverse Product Line
Christiansen pointed to the strength of Lego’s brand and its diverse product line that hits on a variety of “passion points” for its strong performance. These products range from themed sets of Star Wars to buildable muscle cars and cityscapes. The company is growing its portfolio to around 750 products this year, with 48% of that portfolio being new. This strategy ensures fresh and relevant sets for all consumers.
Expansion into New Markets
Lego has also been reaping the benefits of opening stores in new markets, particularly in China. So far in 2023, the company opened 89 shops worldwide, with 54 of those in China. The region is newly exposed to the iconic building bricks, and physical locations have helped show adults and children how to play with Lego.
Continued Growth Outlook
“We believe we will end the year at a single-digit growth rate,” Christiansen said. “I believe we can continue to outpace the market.”