First half witnesses an increase in revenue

While many toy companies struggle to combat the negative impact of inflation on their sales, Lego stands out as a shining example of success.

The privately held Danish toy manufacturer experienced a remarkable 1% increase in revenue during the first half of this year, reaching an impressive 27.4 billion Danish krone, equivalent to approximately $4 billion.

In contrast, publicly traded competitors such as Mattel, Hasbro, Funko, and Jakks Pacific have all reported significant double-digit declines in both revenue and sales throughout the year.

CEO Niels Christiansen expressed his satisfaction with Lego’s consistent outperformance of the industry, stating, “What truly pleases me is the fact that we have consistently outgrown the market year after year, surpassing it by 10 percentage points. This ongoing trend reflects our ability to consistently gain market share, which is of utmost importance to us.”

During the Covid-19 pandemic, toy companies experienced significant growth as parents sought ways to entertain their children during lockdowns, and even adults rediscovered their love for toys to combat boredom.

Lego capitalized on this momentum, leveraging a diverse range of products that cater to both kids and adults. Through its exceptional performance, Lego not only outperformed the industry but also captured a larger share of the market.

Naturally, the company faced macroeconomic challenges, such as increased costs for materials, shipping, and energy.

Despite these challenges, Lego achieved a net profit of 5.1 billion Danish krone, approximately $742 million, in the first half of the year. Although this represents a 17% decline compared to the same period in 2022, Christiansen anticipates a decrease in raw material costs going forward as prices stabilize.

Furthermore, Lego has mitigated the impact of higher shipping costs by strategically locating manufacturing plants near key markets, such as the United States, which receives its Lego products from a factory in Mexico. This supply chain will be further shortened in the next two years with the opening of a new plant in Virginia.

Christiansen credits the strong demand for Lego’s diverse range of building sets as a significant factor in narrowing the gap. Consumer sales grew by 3% in the first half of the year.

He attributes Lego’s impressive performance in 2023 to the strength of the brand and its ability to cater to various “passion points” through its product line. This range includes themed sets inspired by Star Wars, buildable muscle cars, and cityscapes.

The company plans to expand its portfolio to approximately 750 products this year, with 48% consisting of new additions. This strategy ensures a fresh and relevant selection of sets for all consumers.

Lego has also capitalized on new market opportunities by opening stores, particularly in China. In 2023 alone, the company has opened 89 shops worldwide, with 54 of them in China. These physical locations have played a crucial role in introducing both adults and children to the joy of playing with Lego.

Looking ahead, Christiansen confidently states, “We believe we will end the year with a single-digit growth rate. I am confident that we can continue to surpass the market.”