The Lego company increased its sales by 2% last year, even as the global toy industry saw a 7% sales decline, according to data from Circana.
Pandemic-era profits that fueled the toy industry's exponential sales growth slowed in 2023 as consumers cut back on discretionary spending amid rising inflationary costs and higher credit card debt. Meanwhile, Denmark-based Lego posted resilient sales, with revenue reaching 65.9 billion Danish crowns, or about $9.65 billion, it said Tuesday.
“Being able to outperform the market size by almost 10 percentage points again, like we've done in the last few years, I think it's really nice to see that we were able to do that in the good years and also the bad years,” he told CNBC. Lego CEO Niels Christiansen.
Lego was among the toy companies that made massive profits during the Covid-19 pandemic and continues to outperform the industry and gain market share. The company saw sales increase 27% in 2021 and 17% in 2022.
The toy maker's top-performing brands last year included Lego Icons, Lego Technic, Lego City, Lego Harry Potter and Lego Star Wars. These kits vary in size and difficulty, and the company says the themes make it fun for kids to learn building skills while also providing a creative outlet for adults.
In 2023, the company had 780 products, of which about 50% were new items. This is on par with previous years and is part of the company's strategy to have new and relevant sets for all consumers.
Of course, the company hasn't been immune to macroeconomic pressures, particularly as buyers tighten their wallets. Christiansen said Lego is selling the same volume of products, but the company has noticed that customers “switched” in 2023 and opted for lower-priced sets.
Net profit in 2023 reached 13.1 billion Danish crowns, or about $1.92 billion, almost 5% less than in 2022.
In particular, the key Chinese market experienced revenue declines.
“Chinese consumers are really slowing down their spending,” Christiansen said.
Lego has been increasing its presence in China in recent years, opening hundreds of retail stores. While Lego first entered the country in 1993, it wasn't until the last decade that the brick maker began a massive expansion in the region.
Of the 147 new Lego stores opened last year, 81 of them were in China. While Christiansen says that number will drop to around 40 new openings in 2024, physical stores remain a key focus for the brand as it moves into smaller cities in China.
Lego has also been expanding its digital presence, partnering with Epic Games to launch Lego Fortnite, an open-world survival video game.
“We're basically competing for kids' time and attention and being relevant to them,” Christiansen said.
Lego's team of digital experts grew 27% in 2023, the company said, as it pushed to improve online experiences across the board, from shopping to TV and movie content. The goal is always to link these digital touchpoints with physical play.
“At the end of the day, they may spend a little on Lego Fortnite or whatever, but I hope that when Christmas comes around we'll be on their wish list,” Christiansen said.
