Customers walk through a Lego store in Shanghai, China, on February 3, 2024.
Costofoto | Nurphoto | Getty Images
An inflation-driven sales slump hit the toy industry in the first half of 2024, but one company is gaining market share brick by brick.
On Wednesday, Lego said revenue for the first six months of the year rose 13% to 31 billion Danish kroner, or about $4.65 billion.
Niels Christiansen, chief executive of the privately held Danish toymaker, told CNBC that the company is seeing strength across its portfolio, especially with Lego Icons and Lego Creator, and through its partnership with Epic Games' Fortnite.
Last year, Lego saw a trend of consumers “switching brands,” or opting for lower-priced sets, while still buying the same volume as the year before. This year, volume has increased, Christiansen said.
“To the extent they fell last year, they're not falling any further,” he said. “So that's leveled off. And we see that almost all of the growth is actually volume growth.”
Meanwhile, publicly traded rival Mattel saw net sales fall 1% in the first six months of 2024 and Hasbro reported net income fell 21% between January and the end of June. Mattel faces tough comparisons with “Barbie”-driven toy sales in 2023, and Hasbro is still reeling from its eOne divestiture.
Lego has continued to grow during the pandemic with a diverse range of products that meet the needs of children and adults alike. In addition to sets related to popular franchises such as Harry Potter and Star Wars, Lego also has innovative design options for consumers to build flowers and succulents, famous works of art and animals.
Christiansen said sales in the United States and Europe remain strong, while sales in China remain stable. He added that consumers in the region are spending less on higher-value items and that their purchasing frequency has decreased.
Lego is not giving up on expanding in China, however. Christiansen said there is still “long-term potential” in the region.
Of the 40 Lego stores that opened in the first quarter, 20 are in China. Of the 60 openings planned for the second half of the year, 20 are planned in China.
Sustainability
Christiansen also praised Lego's sustainability efforts. So far this year, the company has nearly doubled the amount of renewable and recyclable materials it uses in its bricks compared to the whole of 2023.
“It's a good milestone,” he said. “It's a good step forward.” [We are] “We're spending quite a bit on that in a number of ways, mainly buying material that's more expensive, because mass balance material is more expensive than standard.”
Christiansen noted that Lego is not passing that cost on to consumers.
“By actually being willing to pay a premium to get this product, we also create an incentive for [suppliers] “To really develop the type of products and establish greater production capacity for these types of products. We are really working as an industry to try to accelerate that whole process.”
In the coming years, Lego hopes to source half of its raw materials from sustainable sources.
