Clients at a Lego retailer in Shanghai, China, on Feb. 3, 2024.
Costfoto | Nurphoto | Getty Pictures
An inflation-fueled gross sales stoop hit the toy trade within the first half of 2024, however one firm is gaining market share brick by brick.
On Wednesday, Lego mentioned income throughout 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 energy 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 customers “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 mentioned.
“To the extent they traded down final yr, they don’t seem to be buying and selling additional down,” he mentioned. “In order that has stabilized. And we see nearly the entire development is definitely development in quantity.”
In the meantime, publicly traded rival Mattel noticed internet gross sales fall 1% within the first six months of 2024 and Hasbro reported that its internet income fell 21% between January and the tip of June. Mattel is going through 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 development with a various slate of merchandise that cater to youngsters and adults alike. Along with units tied to widespread franchises equivalent to Harry Potter and Star Wars, Lego additionally has modern design choices for customers to construct flowers and succulents, well-known artworks and animals.
Gross sales within the U.S. and Europe stay sturdy, 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.
Nonetheless, 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 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. Up to now this yr, the corporate has practically doubled the quantity of renewable and recyclable supplies it makes use of in its bricks in comparison with full-year 2023.
“That is a very good milestone,” he mentioned. “That is a very good 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 steadiness materials is costlier than simply customary.”
Christiansen famous that Lego is just not passing that value on to customers.
“By really being prepared to pay a premium to get to this product, we additionally created an incentive for [suppliers] to truly develop the form of merchandise and to determine extra manufacturing capability for these sort of merchandise. We’re working actually as an trade have to 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.
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