Customers at a Lego store in Shanghai, China, on February 3, 2024.
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An inflation-induced sales slump has hit the toy industry in the first half of 2024, but one company is gaining market share bit by bit.
On Wednesday, Lego said revenue in the first six months of this year rose 13% to 31 billion Danish kroner, or about $4.65 billion.
Niels Christiansen, chief executive of the privately held Danish toymaker, told CNBC that the company sees strength in its product portfolio, particularly Lego Icons and Lego Creator, as well as its partnership with Epic Games’ Fortnite.
Last year, Lego saw a trend of consumers “cutting prices” or opting for lower-priced sets, but still buying the same amount as the year before. Sales are up this year, Christiansen said.
“To the extent that their stock prices fell over the last year, their stock prices are not going to fall any further,” he said. “So things have stabilized. Almost all of the growth we’re seeing is actually growth in volume.”
Meanwhile, publicly traded rival Mattel’s net sales fell 1% in the first six months of 2024, and Hasbro reported a 21% drop in net income from January to the end of June. %. Mattel faces tough comparisons with Barbie-driven toy sales in 2023, while Hasbro is still reeling from the divestment of eOne.
LEGO continues to build on its pandemic-era growth with a variety of products for kids and adults. In addition to sets related to popular franchises such as Harry Potter and Star Wars, LEGO offers consumers innovative design options for building flowers and succulents, famous artworks and animals.
Christiansen noted that sales in the United States and Europe remained strong, while sales in China were flat. Consumers in the region are spending less on big-ticket items and buying less frequently, he said.
However, Lego has not given up its expansion in China. Christiansen said the area still had “long-term potential.”
Of the 40 new LEGO stores opened in the first quarter, 20 were located in China. Likewise, of the 60 new stores planned for the second half of this year, 20 will be opened in China.
Sustainable development
Christiansen also praised Lego’s sustainability efforts. So far this year, the company has nearly doubled the amount of renewable and recyclable materials used in its bricks compared with all of 2023.
“This is a good milestone,” he said. “This is a big step forward. (We’re) investing heavily in several areas, mainly purchasing more expensive materials because mass balance materials are more expensive than standard materials.”
Christiansen noted that Lego is not passing this cost on to consumers.
“By actually being willing to pay a premium to get this product, we also incentivize (suppliers) to actually develop this product and build more production capacity for this product. What we really need to do as an industry is try to speed up the whole process. speed.
Over the next few years, LEGO hopes to source half of its ingredients from sustainable sources.
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