According to data from Circana, the Lego company increased its sales by 2% last year, while the global toy industry saw sales decline by 7%.
Pandemic-era gains that fueled exponential sales growth in the toy industry faded in 2023 as consumers reduced spending amid rising inflation costs and increased credit card debt. Meanwhile, Denmark-based Lego reported stable sales, with sales of 65.9 billion Danish crowns, or about $9.65 billion, it said Tuesday.
“I think the opportunity to grow almost 10 percentage points above the market again, as we have done in recent years, is really nice to see that we can do that in good years and that we can do it in bad years too,” Lego said -CEO Niels Christiansen told CNBC.
Lego was among the toy companies that posted huge gains during the Covid-19 pandemic and continues to outperform the industry and gain market share. The company reported a 27% increase in revenue in 2021 and 17% in 2022.
The toy maker’s top-performing brands last year included Lego Icons, Lego Technic, Lego City, Lego Harry Potter and Lego Star Wars. These kits vary in size and level of difficulty. The company says the themes make it fun for kids to learn building skills while providing a creative outlet for adults.
In 2023, the company had 780 products, around 50% of which were new. This is on par with previous years and is part of the company’s strategy to offer fresh and relevant sets for all consumers.
Of course, the company hasn’t been immune to macroeconomic pressures, especially as shoppers tighten their wallets. Christiansen said Lego sold the same amount of products, but the company found that customers had “given in” in 2023 and opted for cheaper sets.
Net profit in 2023 reached 13.1 billion Danish crowns, or about $1.92 billion, down almost 5% compared to 2022.
The important Chinese market in particular recorded declines in sales.
“Chinese consumers are really holding back on their spending,” Christiansen said.
Lego has expanded its presence in China in recent years, opening hundreds of retail locations. While Lego first came to the country in 1993, the brick maker only began massive expansion in the region in the last decade.
Of the 147 new Lego stores that opened last year, 81 were in China. While Christiansen says the number will drop to about 40 new store openings in 2024, brick-and-mortar remains a key focus for the brand as it moves into smaller cities in China.
Lego has also expanded its digital presence and launched Lego Fortnite, an open-world survival video game, in collaboration with Epic Games.
“Basically we’re competing for kids’ time and attention and relevance to them,” Christiansen said.
Lego’s team of digital experts grew 27% in 2023, the company said, as it pushed to improve online experiences across everything from shopping to TV and film content. The goal is always to link these digital touchpoints back to the physical game.
“Ultimately they might spend a little bit of money on Lego Fortnite or whatever, but I hope we’re on their wish list for Christmas,” Christiansen said.
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2024-03-12 08:00:01
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