Clients at a Lego retailer in Shanghai, China, on Feb. 3, 2024.
Costfoto | Nurphoto | Getty Pictures
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 mentioned income through the first six months of the 12 months jumped 13%, reaching 31 billion Danish kroner, or about $4.65 billion.
Niels Christiansen, CEO of the privately held Danish toymaker, informed CNBC that the corporate is seeing power throughout its portfolio, particularly with Lego Icons and Lego Creator, and thru its partnership with Epic Video games’ Fortnite.
Final 12 months, Lego noticed a pattern of shoppers “buying and selling down” or choosing lower-priced units, whereas nonetheless shopping for the identical quantity because the 12 months earlier than. This 12 months, quantity is up, Christiansen mentioned.
“To the extent they traded down final 12 months, they are not buying and selling additional down,” he mentioned. “In order that has stabilized. And we see virtually 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 top of June. Mattel is dealing with robust 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 fashionable franchises reminiscent of Harry Potter and Star Wars, Lego additionally has progressive design choices for shoppers 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 mentioned shoppers within the area are spending much less on bigger-ticket objects, and their frequency of buying is down.
Nevertheless, 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 12 months, 20 are set for China.
Sustainability
Christiansen additionally touted Lego’s sustainability efforts. To date this 12 months, 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 milestone,” he mentioned. “That is 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 stability materials is costlier than simply normal.”
Christiansen famous that Lego is just not passing that value on to shoppers.
“By truly being prepared to pay a premium to get to this product, we additionally created an incentive for [suppliers] to truly 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 velocity on that whole course of.”
Over the following few years, Lego hopes to supply half its uncooked supplies from sustainable sources.
