A customer at a Lego store in Shanghai, China, on February 3, 2024.
Costphoto | Nurphoto | Getty Images
In the first half of 2024, the toy industry was hit by sluggish sales due to inflation, but one company was steadily expanding its market share.
Lego said on Wednesday that its revenue rose 13 percent to 31 billion Danish kroner ($4.65 billion) in the first half of the year.
Niels Christiansen, CEO of the privately held Danish toy maker, told CNBC that the company is seeing strength across its portfolio, particularly through its partnerships with Lego Icons and Lego Creator, as well as Epic Games’ Fortnite.
Last year, Lego saw consumers tend to “downgrade,” or choose lower-priced sets, while still buying the same amount of merchandise as the year before. This year, purchases are up, Christiansen said.
“Prices have come down from last year, so they’re not going to go down any further,” he said, “so they’re stable. And I think almost all of the growth is actually volume growth.”
Meanwhile, publicly traded rival Mattel reported a 1% drop in net sales for the first half of 2024, while Hasbro reported a 21% drop in net revenue from January to the end of June. Mattel faces tough comparisons with toy sales driven by “Barbie” in 2023, and Hasbro has yet to recover from the sale of eOne.
LEGO continues to experience pandemic-era growth with a diverse range of products that can be enjoyed by children and adults alike. In addition to sets tied to popular franchises like Harry Potter and Star Wars, LEGO also offers innovative design options that allow consumers to build flowers, succulents, famous works of art and animals.
Christiansen noted that sales in the U.S. and Europe remain strong, but sales in China have been flat, where he said consumers are spending less on big-ticket items and buying less frequently.
But Lego isn’t giving up on expanding in China, and Christiansen said the region still sees “long-term potential.”
Of the 40 Lego stores that opened in the first quarter, 20 are in China. Similarly, of the 60 stores scheduled to open later this year, 20 will be in China.
Sustainability
Christiansen also praised Lego’s sustainability efforts: So far this year, the company has nearly doubled the amount of renewable and recyclable materials it uses in its bricks compared to the full year of 2023.
“This is a good milestone,” he said. “This is a good step forward.” [We are] We’re spending a lot on this in a couple of ways, but mainly by buying more expensive materials. Mass balance materials are more expensive than standard ones.”
Christiansen noted that Lego does not pass on those costs to consumers.
“We are also pleased that people are actually willing to pay a premium to get this product. [suppliers] It’s really about developing those products and building more capacity to produce those types of products. We as an industry are trying to move that whole process forward more quickly.”
Lego wants to source half of its raw materials from sustainable sources over the next few years.
