The Lego company grew sales 2% last yr, at the same time as the worldwide toy industry saw sales slip 7%, in response to data from Circana.
The pandemic-era gains that fueled exponential toy industry sales growth waned in 2023 as consumers cut discretionary spending amid rising inflationary costs and increased bank card debt. Meanwhile Denmark-based Lego posted resilient sales, with revenue reaching 65.9 billion Danish krone, or about $9.65 billion, it said Tuesday.
“With the ability to again outgrow the market by almost 10 percentage points, like we have done the last couple of years, I believe it’s very nice to see that we could try this in good years, and we may also do it in bad years,” Lego CEO Niels Christiansen told CNBC.
Lego was among the many toy firms that saw massive gains throughout the Covid-19 pandemic and continues to outperform the industry and snap up market share. The corporate saw sales jump 27% in 2021 and 17% in 2022.
The toymaker’s top-performing brands last yr included Lego Icons, Lego Technic, Lego City, Lego Harry Potter and Lego Star Wars. These kits range in size and difficulty, with the corporate saying the themes make it fun for kids to learn constructing skills while providing a creative outlet for adults.
In 2023, the corporate had 780 products, around 50% of which were latest items. That is on par with previous years and is a component of the corporate’s strategy for having fresh and relevant sets for all consumers.
In fact, the corporate has not been proof against macroeconomic pressures, particularly as shoppers tighten their purse strings. Christiansen said Lego is selling the identical volume of products, but the corporate has noticed that customers “traded down” in 2023 and opted for lower-priced sets.
Net profit in 2023 reached 13.1 billion Danish krone, or about $1.92 billion, down almost 5% from 2022.
Specifically, the important thing Chinese market saw revenue declines.
“Chinese consumers are really holding back on spending,” Christiansen said.
Lego has been growing its footprint in China over the past few years, opening a whole lot of retail locations. While Lego first entered the country in 1993, it was only within the last decade that the brick maker began a large expansion within the region.
Of the 147 latest Lego stores opened last yr, 81 of them were in China. While Christiansen says that number will fall to around 40 latest openings in 2024, brick-and-mortar stays a key focus for the brand because it moves into smaller cities in China.
Lego has also been expanding its digital presence, partnering with Epic Games to launch Lego Fortnite, an open world survival video game.
“We’re principally competing for kids’s time and their attention and being relevant with them,” Christiansen said.
Lego’s team of digital experts grew by 27% in 2023, the corporate said, because it pushed to enhance online experiences across the board from shopping to television and film content. The goal is at all times to tie these digital touchpoints back to physical play.
“At the top of the day, they might spend a little bit bit on Lego Fortnite or wherever, but I hope when it gets to Christmas that we’re on their wish list,” Christiansen said.