The Lego company experienced a 2% increase in sales last year, defying the broader trend within the global toy industry which witnessed a 7% decline in sales, according to data sourced from Circana.
Despite the slowdown in pandemic-induced sales that had previously propelled significant growth in the toy industry, 2023 saw a downturn as consumers scaled back on discretionary spending amidst rising inflation and mounting credit card debts.
However, Denmark-based Lego managed to maintain robust sales performance, disclosing a revenue of 65.9 billion Danish kroner, approximately $9.65 billion, as announced on Tuesday.
Niels Christiansen, CEO of Lego, remarked, “Being able to again outgrow the market by almost 10 percentage points, like we’ve done the last couple of years, I think it’s really nice to see that we could do that in good years, and we can also do it in bad years,” in an interview with CNBC.
Lego emerged as one of the toy companies that experienced significant growth during the COVID-19 pandemic and continues to surpass industry standards, capturing a larger market share. The company witnessed a remarkable 27% increase in sales in 2021, followed by a 17% rise in 2022.
The toymaker’s standout brands in the past year included Lego Icons, Lego Technic, Lego City, Lego Harry Potter, and Lego Star Wars, offering a range of kits in varying sizes and complexities.
The company emphasized that these thematic sets not only facilitate children’s learning of building skills but also serve as a creative outlet for adults.
In 2023, Lego introduced 780 products, with around 50% being new additions, consistent with its strategy of providing fresh and relevant sets to its diverse consumer base.
Nevertheless, Lego has not been impervious to broader economic pressures, especially as consumers become more cautious with their spending habits. Christiansen noted that while the volume of products sold remained consistent, there was a noticeable shift towards lower-priced sets in 2023.
The net profit for 2023 amounted to 13.1 billion Danish krone, approximately $1.92 billion, marking a decrease of nearly 5% from the previous year. Notably, the crucial Chinese market experienced a decline in revenue.
“Chinese consumers are really holding back on spending,” observed Christiansen.
Over the past few years, Lego has expanded its presence in China by establishing hundreds of retail outlets. Despite entering the Chinese market in 1993, it wasn’t until the last decade that the company embarked on a significant expansion in the region.
Out of the 147 new Lego stores opened last year, 81 were in China. Although Christiansen anticipates a reduction to approximately 40 new openings in 2024, brick-and-mortar establishments remain a focal point for the brand as it ventures into smaller cities across China.
In addition to its physical expansion, Lego has been bolstering its digital footprint, collaborating with Epic Games to launch Lego Fortnite, an open-world survival video game.
“We’re basically competing for children’s time and their attention and being relevant with them,” Christiansen remarked.
The company reported a 27% growth in its team of digital experts in 2023, underscoring its commitment to enhancing online experiences ranging from shopping to television and film content, all to bridge digital interactions with physical play.
“At the end of the day, they may spend a little bit on Lego Fortnite or wherever, but I hope when it gets to Christmas that we are on their wish list,” Christiansen concluded.
