Prospects at a Lego retailer in Shanghai, China, on Feb. 3, 2024.
Costfoto | Nurphoto | Getty Photographs
An inflation-fueled gross sales stoop hit the toy business within the first half of 2024, however one firm is gaining market share brick by brick.
On Wednesday, Lego stated income in the course of the first six months of the yr jumped 13%, reaching 31 billion Danish krone, or about $4.65 billion.
Niels Christiansen, CEO of the privately held Danish toymaker, instructed CNBC that the corporate is seeing power throughout its portfolio, particularly with Lego Icons and Lego Creator, and thru its partnership with Epic Video games’ Fortnite.
Final yr, Lego noticed a development of shoppers “buying and selling down” or choosing lower-priced units, whereas nonetheless shopping for the identical quantity because the yr earlier than. This yr, quantity is up, Christiansen stated.
“To the extent they traded down final yr, they are not buying and selling additional down,” he stated. “In order that has stabilized. And we see nearly the entire progress is definitely progress in quantity.”
In the meantime, publicly traded rival Mattel noticed web gross sales fall 1% within the first six months of 2024 and Hasbro reported that its web income fell 21% between January and the top of June. Mattel is dealing with powerful comparisons from toy gross sales fueled by “Barbie” in 2023, and Hasbro continues to be reeling from its divestment of eOne.
Lego has continued to construct on pandemic-era progress with a various slate of merchandise that cater to children and adults alike. Along with units tied to standard franchises akin to Harry Potter and Star Wars, Lego additionally has progressive design choices for shoppers to construct flowers and succulents, well-known artworks and animals.
Gross sales within the U.S. and Europe stay robust, Christiansen famous, whereas China gross sales are flat. He stated shoppers within the area are spending much less on bigger-ticket objects, and their frequency of buying is down.
Nonetheless, Lego is just not giving up on enlargement in China. Christiansen stated there’s nonetheless “long-term potential” within the space.
Of the 40 Lego shops that opened within the first quarter, 20 had been in China. Equally, of the 60 deliberate openings within the second half of the yr, 20 are set for China.
Sustainability
Christiansen additionally touted Lego’s sustainability efforts. To date this yr, the corporate has almost doubled the quantity of renewable and recyclable supplies it makes use of in its bricks in comparison with full-year 2023.
“That is milestone,” he stated. “That is step ahead. [We are] spending fairly considerably on that in a few methods, primarily in shopping for materials that’s dearer, as a result of mass stability materials is dearer than simply customary.”
Christiansen famous that Lego is just not passing that value on to shoppers.
“By truly being keen to pay a premium to get to this product, we additionally created an incentive for [suppliers] to really develop the type of merchandise and to ascertain extra manufacturing capability for these sort of merchandise. We’re working actually as an business have to attempt to put extra velocity on that complete course of.”
Over the subsequent few years, Lego hopes to supply half its uncooked supplies from sustainable sources.
