Clients at a Lego retailer in Shanghai, China, on Feb. 3, 2024.
Costfoto | Nurphoto | Getty Photographs
An inflation-fueled gross sales hunch 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, informed 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 pattern 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 stated.
“To the extent they traded down final yr, they don’t seem to be buying and selling additional down,” he stated. “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 remains 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 common franchises comparable to Harry Potter and Star Wars, Lego additionally has revolutionary design choices for customers 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 customers within the area are spending much less on bigger-ticket gadgets, and their frequency of buying is down.
Nevertheless, Lego isn’t giving up on enlargement in China. Christiansen stated 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 yr, 20 are set for China.
Sustainability
Christiansen additionally touted Lego’s sustainability efforts. Thus far 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 commonplace.”
Christiansen famous that Lego isn’t passing that price on to customers.
“By truly being prepared to pay a premium to get to this product, we additionally created an incentive for [suppliers] to really develop the sort of merchandise and to determine extra manufacturing capability for these kind of merchandise. We’re working actually as an business have to attempt to put extra pace on that total course of.”
Over the following few years, Lego hopes to supply half its uncooked supplies from sustainable sources.
