On Tuesday, Denmark’s Lego chief executive reflected on a difficult year for the world’s largest toymaker and outlined the company’s long-term plans to stay relevant and “keep cool with kids.”
Lego said its revenue in 2023 will increase by 2% from the previous year to 65.9 billion Danish kroner (approximately US$9.65 billion). Lego said in a statement that this was in line with expectations.
“It’s been a difficult year,” Lego CEO Niels Christiansen told CNBC. However, he said the company “has managed to capture a significant amount of market share.”
The Danish toymaker said operating profit fell slightly to DKK 17.1 billion from DKK 17.9 billion, noting it increased spending on strategic initiatives aimed at driving growth.
Net profit in 2023 was DKK 13.1 billion, compared with DKK 13.8 billion the previous year.
Lego said consumer sales rose 4% despite a decline in China, which it attributed to growing demand in the United States and Central and Eastern Europe.
Meanwhile, the broader toy industry has struggled to maintain growth after booming during the coronavirus pandemic, when parents looked for new ways to entertain their children and adults rediscovered childhood pastimes.
Toy company Hasbro said earlier this month that its 2023 revenue would fall 15% from 2022, and it expected a further decline this year.
Lego sees growth potential in China
“On the U.S. side, I think we’ve seen very, very strong progress,” Christiansen said. “Even though the U.S. market was also sluggish, we actually grew pretty comfortably.”
Still, Lego struggled in China last year. Christiansen said this was due to more difficult overall economic conditions in the country. Consumers still buy Lego sets, but often choose lower-priced sets, he said.
Still, Christiansen believes Lego has huge long-term potential in China.
“We are on a growth journey in China and hope and look forward to a return to growth,” he said. This includes opening new stores across the country, with about 40 stores expected to be added in 2024, he said.
“We knew that every time we arrived in a new city, we would open a store, start brand-building activities around it, work with partners, and then it would just take off,” Christiansen said.
Lego said on Tuesday it would open 147 stores by 2023, bringing its global store count to more than 1,000. About 100 more are expected to open in 2024, Christiansen said.
The toymaker said it will launch its largest ever product offering in 2023, with 780 products, about half of which are new.
“Stay relevant”
The most popular ranges include Lego Icons, which is aimed at a slightly older audience and includes sets such as Titanic and the Eiffel Tower, Lego City and Lego Technic, which includes structures such as racing cars . Its Star Wars and Harry Potter products are also among the most popular series.
LEGO products such as bouquets and plants are also popular on social media, garnering millions of likes on TikTok videos, and the company has also partnered with the popular video game Fortnite to feature LEGO brick-built characters and background featured.
Christiansen told CNBC that licensing and collaborations like this are critical to Lego’s long-term plans and “keeping kids connected and calm.”
“We want to be where they are, and we want to provide them with an experience that they really enjoy,” he said. “We’re competing for kids’ time and attention.”
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