Clients at a Lego retailer in Shanghai, China, on Feb. 3, 2024.
Costfoto | Nurphoto | Getty Photos
An inflation-fueled gross sales droop hit the toy business within the first half of 2024, however one firm is gaining market share brick by brick.
On Wednesday, Lego mentioned income in the course of the first six months of the 12 months 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 energy throughout its portfolio, particularly with Lego Icons and Lego Creator, and thru its partnership with Epic Video games’ Fortnite.
Final 12 months, Lego noticed a development of customers “buying and selling down” or choosing lower-priced units, whereas nonetheless shopping for the identical quantity because the 12 months earlier than. This 12 months, quantity is up, Christiansen mentioned.
“To the extent they traded down final 12 months, they don’t seem to be buying and selling additional down,” he mentioned. “In order that has stabilized. And we see nearly all the development is definitely development 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 tip of June. Mattel is dealing with robust 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 development with a various slate of merchandise that cater to youngsters and adults alike. Along with units tied to well-liked franchises equivalent to Harry Potter and Star Wars, Lego additionally has revolutionary design choices for customers to construct flowers and succulents, well-known artistic endeavors and animals.
Gross sales within the U.S. and Europe stay robust, Christiansen famous, whereas China gross sales are flat. He mentioned customers within the area are spending much less on bigger-ticket gadgets, and their frequency of buying is down.
Nevertheless, Lego is just not giving up on enlargement in China. Christiansen mentioned there may be nonetheless “long-term potential” within the space.
Of the 40 Lego shops that opened within the first quarter, 20 have been in China. Equally, of the 60 deliberate openings within the second half of the 12 months, 20 are set for China.
Sustainability
Christiansen additionally touted Lego’s sustainability efforts. To date this 12 months, 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 mentioned. “That is step ahead. [We are] spending fairly considerably on that in a few methods, primarily in shopping for materials that’s costlier, as a result of mass stability materials is costlier than simply commonplace.”
Christiansen famous that Lego is just not passing that value on to customers.
“By truly being keen to pay a premium to get to this product, we additionally created an incentive for [suppliers] to truly develop the type of merchandise and to determine extra manufacturing capability for these sort of merchandise. We’re working actually as an business must attempt to put extra pace on that whole course of.”
Over the subsequent few years, Lego hopes to supply half its uncooked supplies from sustainable sources.
