The chief executive of Denmark’s Lego on Tuesday reflected on a difficult yr for the world’s largest toymaker and outlined the corporate’s long-term plans to remain relevant and “cool with kids.”
Lego said its revenue in 2023 was 2% higher year-on-year, rising to 65.9 billion Danish crowns (about $9.65 billion). This is in step with expectations, Lego said in a press release.
“It’s been a difficult year,” Lego CEO Niels Christiansen told CNBC. However, the corporate managed to “gain a lot of market share,” he said.
The Danish toymaker said operating profit fell barely to 17.1 billion from 17.9 billion Danish crowns, noting that it had increased spending on strategic initiatives to drive growth.
Net profit amounted to 13.1 billion Danish kroner in 2023, in comparison with 13.8 billion the previous yr.
Consumer sales rose 4% despite the slump in China, Lego said, attributing the expansion to rising demand within the United States and Central and Eastern Europe.
This comes at a time when the toy industry as a complete is struggling to take care of growth after booming in the course of the coronavirus pandemic as parents looked for brand new ways to entertain their children and adults rediscovered their childhood pastimes.
Toymaker Hasbro said earlier this month that its sales fell 15% in 2023 in comparison with 2022 and that it expects further declines this yr.
Lego sees growth potential in China
“On the U.S. side, I think we’ve seen very, very big progress,” Christiansen said. “Even though the market in the US was also negative, we actually managed to grow quite comfortably.”
Still, Lego struggled in China last yr. Christiansen said this was on account of the tougher macroeconomic conditions within the country. Consumers still bought Lego sets, but often opted for ones with cheaper prices, he said.
Customers at a Lego store in Shanghai, China, February 3, 2024.
Cost photo | Photo only | Getty Images
Still, Christiansen believes there is critical long-term potential for Lego in China.
“We are on a growth path in China and hope and expect that we will return to the growth path,” he said. This includes opening recent branches across the country, with around 40 more branches expected in 2024, he said.
“We know that every time we travel to a new city, we open a store, start the brand building activities, work with partners and then get started,” Christiansen said.
Lego announced Tuesday that it has opened 147 stores in 2023, bringing it to over 1,000 stores worldwide. Christiansen said about 100 more are expected to open in 2024.
The toy maker said it had its largest product offering ever in 2023, with 780 products available, about half of which were recent releases.
“Stay current”
The hottest ranges included Lego Icons, which was geared toward a rather older audience and includes sets akin to the Titanic and the Eiffel Tower, Lego’s City range and Lego Technic, which covers builds akin to racing cars. Star Wars and Harry Potter products were also amongst the preferred product lines.
Lego products, including bouquets and plants, are also popular on social media and have received tens of millions of likes in TikTok videos. The company also launched a collaboration with the favored video game Fortnite with LEGO brick characters and backgrounds.
Licenses and collaborations like these are key to Lego’s long-term plans and “staying relevant and cool with kids,” Christiansen told CNBC.
“We want to be where they are and we want to give them the kinds of experiences that they really love,” he said. “We are competing for children’s time and attention.”
