While fellow toy companies grapple with inflation-driven sales setbacks, Lego is constructing a robust success story, one brick at a time. The Danish toymaker, operating privately, witnessed a 1% increase in revenue during the initial half of this year, reaching a substantial 27.4 billion Danish krone, approximately $4 billion.
This success stands in stark contrast to its publicly traded counterparts like Mattel, Hasbro, Funko, and Jakks Pacific, which all encountered substantial double-digit revenue declines in the same timeframe.
CEO Niels Christiansen highlighted the company’s impressive feat of consistently outpacing the industry’s growth rate by 10 percentage points each year for the last several years. This achievement translates to consistent market share expansion for Lego, a trend that continues to be the cornerstone of their strategy.
While the toy sector enjoyed a pandemic-induced surge, Lego capitalized on its momentum, tapping into a diverse range of products that cater to both children and adults. This diversity, coupled with its market outperformance, allowed Lego to cement its market share.
Economic pressures did not spare Lego, given elevated costs in material, shipping, and energy. Despite this, the company’s net profit for H1 2023 stood at 5.1 billion Danish krone, roughly $742 million, marking a 17% dip from the same period in 2022.
Acknowledging raw material costs as a significant expenditure in the first half, Christiansen remained optimistic about future costs as prices subside. To counter higher shipping expenses, Lego adopted a strategic approach by placing manufacturing facilities close to vital markets, exemplified by a factory in Mexico supplying the U.S. market. The opening of a new plant in Virginia within the next two years will further streamline this supply chain.
Lego’s diverse array of building sets, tailored to a range of interests, contributed to its consumer sales growth of 3% in H1 2023. The brand’s strength and innovation, from Star Wars-themed sets to intricate cityscapes, have been instrumental in driving its impressive performance this year.
The company’s growth trajectory remains solid, expanding its portfolio to encompass around 750 products this year. Roughly 48% of this portfolio will comprise new offerings, demonstrating Lego’s commitment to keeping their range fresh and relevant.
Expanding its horizons, Lego capitalized on new markets, particularly in China, with the establishment of 89 stores globally in 2023, over half of them in China. This exposure to a new audience, coupled with physical store interactions, has revitalized the iconic building brick’s allure.
Christiansen’s outlook remains optimistic, projecting a single-digit growth rate by the end of the year and emphasizing Lego’s ongoing ability to surpass market expectations.
