Customers in a Lego store in Shanghai, China, on February 3, 2024.
Costphoto | Nurphoto | Getty Images
An inflation-related slump in sales hit the toy industry in the primary half of 2024, but one company is gaining market share brick by brick.
On Wednesday, Lego announced that sales in the primary six months of the yr rose 13% to 31 billion Danish kroner, or about $4.65 billion.
Niels Christiansen, CEO of the privately held Danish toymaker, told CNBC that the corporate sees strength across its portfolio, particularly in Lego Icons and Lego Creator, in addition to through its partnership with Epic Games’ Fortnite.
Last yr, Lego saw a trend of consumers switching to cheaper sets or choosing cheaper sets while still buying the identical amount because the yr before. This yr, the quantity has increased, says Christiansen.
“To the extent that they were trading down over the last year, they’re not going to trade down any further,” he said. “So that’s stabilized. And we’re seeing that almost all of the growth is actually coming from volume growth.”
Meanwhile, publicly traded rival Mattel saw net sales decline 1% in the primary six months of 2024, and Hasbro reported a 21% decline in net sales between January and the tip of June. Mattel faces tough comparisons in Barbie-fueled toy sales in 2023, and Hasbro continues to be reeling from the divestiture of eOne.
Lego has continued its growth through the pandemic with a various range of products that appeal to each children and adults. In addition to sets based on popular franchises reminiscent of Harry Potter and Star Wars, Lego also offers consumers modern design options to construct flowers and succulents, famous artworks and animals.
Sales within the U.S. and Europe remained strong, Christiansen noted, while sales in China were flat. He said consumers within the region were spending less on dearer items and their purchase frequency had declined.
However, Lego shouldn’t be giving up on expansion in China. Christiansen said there continues to be “long-term potential” within the region.
Of the 40 Lego stores that opened in the primary quarter, 20 were in China. Of the 60 planned openings within the second half of the yr, 20 are also scheduled to open in China.
sustainability
Christiansen also praised Lego’s sustainability efforts. This yr, the corporate has nearly doubled the quantity of renewable and recyclable materials it uses in its bricks in comparison with the complete yr of 2023.
“This is a good milestone,” he said. “This is a good step forward.” [We are] “You have to spend quite a lot of money in several ways, especially for buying more expensive materials, because mass balance material is more expensive than standard material.”
Christiansen identified that Lego doesn’t pass these costs on to consumers.
“By actually being willing to pay a premium for this product, we also created an incentive for [suppliers] to really develop such products and construct more manufacturing capability for a lot of these products. We are really working on, as an industry need, to hurry up this whole process.”
Lego hopes to source half of its raw materials from sustainable sources in the next few years.
