Prospects at a Lego retailer in Shanghai, China, on Feb. 3, 2024.
Costfoto | Nurphoto | Getty Photographs
An inflation-fueled gross sales hunch hit the toy trade 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 yr jumped 13%, reaching 31 billion Danish krone, or about $4.65 billion.
Niels Christiansen, CEO of the privately held Danish toymaker, instructed CNBC that the corporate is seeing energy throughout its portfolio, particularly with Lego Icons and Lego Creator, and thru its partnership with Epic Video games’ Fortnite.
Final yr, Lego noticed a pattern of shoppers “trading down” or choosing lower-priced units, whereas nonetheless shopping for the identical quantity because the yr earlier than. This yr, quantity is up, Christiansen mentioned.
“To the extent they traded down last year, they’re not trading further down,” he mentioned. “So that has stabilized. And we see almost all of the growth is actually growth in volume.”
In the meantime, publicly traded rival Mattel noticed web gross sales fall 1% within the first six months of 2024 and Hasbro reported that its web income fell 21% between January and the tip of June. Mattel is going through robust comparisons from toy gross sales fueled by “Barbie” in 2023, and Hasbro continues to be reeling from its divestment of eOne.
Lego has continued to construct on pandemic-era progress with a various slate of merchandise that cater to children and adults alike. Along with units tied to fashionable franchises similar to Harry Potter and Star Wars, Lego additionally has modern design choices for shoppers to construct flowers and succulents, well-known artistic endeavors 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.
Nonetheless, Lego just isn’t giving up on enlargement in China. Christiansen mentioned there’s 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 yr, 20 are set for China.
Sustainability
Christiansen additionally touted Lego’s sustainability efforts. To this point this yr, 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’s a good milestone,” he mentioned. “That’s a good step forward. [We are] spending quite significantly on that in a couple of ways, primarily in buying material that is more expensive, because mass balance material is more expensive than just standard.”
Christiansen famous that Lego just isn’t passing that price on to shoppers.
“By actually being willing to pay a premium to get to this product, we also created an incentive for [suppliers] to actually develop the kind of products and to establish more production capacity for these type of products. We are working really as an industry need to try to put more speed on that entire process.”
Over the subsequent few years, Lego hopes to supply half its uncooked supplies from sustainable sources.