People at a Lego store in Shanghai, China, on Feb. 3, 2024.
Costfoto | Nurphoto | Getty Images
An inflation-fueled sales slump hit the toy industry in the blue ribbon half of 2024, but one company is gaining market share brick by brick.
On Wednesday, Lego said revenue during the first place six months of the year jumped 13%, reaching 31 billion Danish kroner, or about $4.65 billion.
Niels Christiansen, CEO of the privately accommodated Danish toymaker, told CNBC that the company is seeing strength across its portfolio, especially with Lego Icons and Lego Author, and through its partnership with Epic Games’ Fortnite.
Last year, Lego saw a trend of consumers “trading down” or opting for lower-priced sets, while at rest buying the same volume as the year before. This year, volume is up, Christiansen said.
“To the extent they traded down at the rear year, they’re not trading further down,” he said. “So that has stabilized. And we see almost all of the growth is actually growth in sum total.”
Meanwhile, publicly traded rival Mattel saw net sales fall 1% in the first six months of 2024 and Hasbro divulged that its net revenue fell 21% between January and the end of June. Mattel is facing tough comparisons from toy transactions fueled by “Barbie” in 2023, and Hasbro is still reeling from its divestment of eOne.
Lego has continued to build on pandemic-era wart with a diverse slate of products that cater to kids and adults alike. In addition to sets tied to standard franchises such as Harry Potter and Star Wars, Lego also has innovative design options for consumers to strengthen flowers and succulents, famous works of art and animals.
Sales in the U.S. and Europe remain strong, Christiansen noted, while China exchanges are flat. He said consumers in the region are spending less on bigger-ticket items, and their frequency of purchasing is down.
No matter how, Lego is not giving up on expansion in China. Christiansen said there is still “long-term potential” in the area.
Of the 40 Lego shops that opened in the first quarter, 20 were in China. Similarly, of the 60 planned openings in the second half of the year, 20 are set for China.
Sustainability
Christiansen also hawked Lego’s sustainability efforts. So far this year, the company has nearly doubled the amount of renewable and recyclable materials it ingests in its bricks compared to full-year 2023.
“That’s a good milestone,” he said. “That’s a good step forward. [We are] spending totally significantly on that in a couple of ways, primarily in buying material that is more expensive, because mass counterbalance material is more expensive than just standard.”
Christiansen noted that Lego is not passing that set someone back on to consumers.
“By actually being willing to pay a premium to get to this product, we also created an incentive for [suppliers] to actually bloom the kind of products and to establish more production capacity for these type of products. We are working really as an industry shortage to try to put more speed on that entire process.”
Over the next few years, Lego hopes to source half its raw papers from sustainable sources.