Prospects at a Lego retailer in Shanghai, China, on February 3, 2024.
Price Photograph | Noor Photograph | Getty Photographs
The toy trade has been hit by an inflation-induced gross sales hunch within the first half of 2024, however one firm is gaining market share little by little.
On Wednesday, Lego mentioned income within the first six months of this yr rose 13% to 31 billion Danish kroner, or about $4.65 billion.
Niels Christiansen, chief govt of the privately held Danish toymaker, advised CNBC that the corporate sees energy in its product portfolio, significantly Lego Icons and Lego Creator, in addition to its partnership with Epic Video games’ Fortnite.
Final yr, Lego noticed a pattern of shoppers “reducing costs” or choosing lower-priced units, however nonetheless shopping for the identical quantity because the yr earlier than. Gross sales are up this yr, Christiansen mentioned.
“To the extent that their inventory costs fell during the last yr, their inventory costs usually are not going to fall any additional,” he mentioned. “So issues have stabilized. Virtually all the development we’re seeing is definitely development in quantity.”
In the meantime, publicly traded opponents Mattel Web gross sales down 1% in first 6 months of 2024 Hasbro The report mentioned its web revenue fell 21% between January and the top of June. Mattel faces robust comparisons with Barbie-driven toy gross sales in 2023, whereas Hasbro continues to be reeling from the divestment of eOne.
LEGO continues to construct on its pandemic-era development with quite a lot of merchandise for teenagers and adults. Along with units associated to in style franchises similar to Harry Potter and Star Wars, LEGO presents shoppers revolutionary design choices for constructing flowers and succulents, well-known artworks and animals.
Christiansen famous that gross sales in the USA and Europe remained sturdy, whereas gross sales in China had been flat. Customers within the area are spending much less on big-ticket objects and shopping for much less ceaselessly, he mentioned.
Nonetheless, Lego has not given up its enlargement in China. Christiansen mentioned the realm nonetheless had “long-term potential.”
Of the 40 new LEGO shops opened within the first quarter, 20 had been situated in China. Likewise, of the 60 new shops deliberate for the second half of this yr, 20 will probably be opened in China.
Sustainable improvement
Christiansen additionally praised Lego’s sustainability efforts. Thus far this yr, the corporate has practically doubled the quantity of renewable and recyclable supplies utilized in its bricks in contrast with all of 2023.
“This can be a good milestone,” he mentioned. “This can be a good step ahead. [We are] A substantial sum of money is spent on this in a lot of methods, primarily by buying costlier supplies, since mass steadiness supplies are costlier than commonplace supplies.
Christiansen famous that Lego is just not passing this value on to shoppers.
“By truly being prepared to pay a premium to get the product, we additionally create an incentive [suppliers] To really develop such merchandise and construct extra manufacturing capability for such merchandise. We’re actually engaged on trade must attempt to pace up the complete course of.
Over the subsequent few years, LEGO hopes to supply half of its elements from sustainable sources.
