Lego Star Wars toys sit on display inside a Toys R Us store in Paramus, Recent Jersey, Nov. 26, 2019.
Bloomberg | Getty Images
While other toy firms struggle with an inflation-fueled sales slump, Lego is constructing positive results brick by brick.
The privately held Danish toymaker saw revenue rise 1% throughout the first six months of this 12 months, reaching 27.4 billion Danish krone, or about $4 billion.
Meanwhile, publicly traded rivals reminiscent of Mattel, Hasbro, Funko and Jakks Pacific have all reported double-digit revenue and sales declines to this point this 12 months.
“I feel what makes me very satisfied is that this incontrovertible fact that we proceed to outgrow the industry,” CEO Niels Christiansen told CNBC. “The nice thing for us is that each 12 months during the last 4 or five years, we have been outgrowing the market by 10 percentage points … which means we have been taking market share consistently and that has continued, that is super essential.”
Toy firms across the industry saw massive gains throughout the Covid-19 pandemic, as parents looked for tactics to maintain 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 various slate of products that cater to kids and adults alike, while outperforming the industry and zapping up market share.
In fact, the corporate has not been proof against macroeconomic pressures, particularly higher costs for material, shipping and energy.
Net profit for the primary half of the 12 months reached 5.1 billion Danish krone, or about $742 million, down 17% from the identical period in 2022.
Raw material costs were a significant expense for the corporate throughout the first half of the 12 months, but Christiansen said he expects that to minimize going forward as prices come down.
Lego has offset among the higher shipping costs by placing manufacturing plants near key markets. For instance, the U.S. gets its Lego products from a factory in Mexico. That provide chain will shorten in the subsequent two years as the corporate opens a latest plant in Virginia.
Moreover, Christiansen said strong demand for Lego’s eclectic number of constructing sets has helped narrow the gap. Consumer sales grew 3% throughout the first half of the 12 months.
Christiansen pointed to the strength of Lego’s brand and its diverse product line that hits on a wide range of “passion points” for its strong performance to this point in 2023. These products range from themed sets of Star Wars to buildable muscle cars and cityscapes.
The corporate is growing its portfolio to around 750 products this 12 months. About 48% of that portfolio shall be latest, Christiansen said. That is on par with previous years and is a component of the corporate’s strategy for having fresh and relevant sets for all consumers.
The corporate also has been reaping the advantages of opening stores in latest markets, particularly in China. To date in 2023, the corporate opened 89 shops worldwide, with 54 of those in China. The region is newly exposed to the enduring constructing bricks and physical locations have helped show adults and kids tips on how to play with Lego.
“We imagine we are going to end the 12 months at a single-digit growth rate,” Christiansen said. “I feel we will proceed to outpace the market.”