Lego’s sales grew 2% last year, despite Global toy industry sales drop 7%according to Circana data.
Growth momentum during the pandemic that drove toy industry sales to grow exponentially in 2023 has waned as consumers cut back on discretionary spending due to rising inflationary costs and mounting credit card debt. Meanwhile, Denmark-based Lego said on Tuesday it had strong sales, with revenue of 65.9 billion Danish kroner, or about $9.65 billion.
“To be able to beat the market again by almost 10 percentage points, like we’ve done the past few years, I think it’s great to see that we can do that in good years and we can also do that in bad years. “, LEGO CEO Niels Christiansen told CNBC.
Lego is one of the toy companies that has made huge gains during the Covid-19 pandemic and continues to outperform the industry and grab market share. The company’s sales will grow by 27% in 2021 and 17% in 2022.
The toymaker’s best-performing brands last year included LEGO Icons, LEGO Technic, LEGO City, LEGO Harry Potter and LEGO Star Wars. The kits vary in size and difficulty, and the company says the themes make learning building skills fun for kids while providing a creative outlet for adults.
In 2023, the company has 780 products, about 50% of which are new. This is in line with previous years and is part of the company’s strategy to provide fresh and relevant sets for all consumers.
Of course, the company isn’t immune to macroeconomic pressures, especially as consumers tighten their wallets. Christiansen said Lego is selling the same number of products, but the company has noticed customers “cutting prices” in 2023 and choosing lower-priced sets.
Net profit in 2023 will reach 13.1 billion Danish kroner, approximately US$1.92 billion, a decrease of nearly 5% from 2022.
In particular, revenue in the major Chinese market declined.
“Chinese consumers are really holding back on spending,” Christiansen said.
LEGO has expanded its footprint in China over the past few years, opening hundreds of retail stores. While Lego first entered the country in 1993, it was only in the last decade that the brick maker began to expand significantly in the region.
Of the 147 new Lego stores opened last year, 81 were in China. Although Christiansen said the number of new stores will drop to about 40 by 2024, physical stores remain a key focus for the brand as it expands into smaller cities in China.
Lego has also been expanding its digital presence, partnering with Epic Games to launch the open-world survival video game Lego Fortnite.
“We’re basically competing for the kids’ time and attention and staying connected to them,” Christiansen said.
The company said LEGO’s team of digital experts grew 27% in 2023 as it works to improve online experiences across the board, from shopping to TV and movie content. Our goal has always been to connect these digital touchpoints with physical games.
“Ultimately, they might spend a little money on Lego Fortnite or something, but I hope by Christmas we’ll be on their wish list,” Christiansen said.
About The Author
