Customers at a Lego store in Shanghai, China, on February 3, 2024.
Costfoto | Nurphoto | Getty Images
Inflation-driven sales slump hit the toy industry in the first half of 2024, but one company is slowly gaining market share.
Lego said on Wednesday that revenue in the first six months of the year rose 13% to 31 billion Danish krone, or about $4.65 billion.
Niels Christiansen, CEO of the privately held Danish toymaker, told CNBC that the company is seeing strength across its entire portfolio, particularly with Lego Icons and Lego Creator, as well as through its partnership with Epic Games’ Fortnite.
Last year, Lego saw a trend of consumers “dealing down,” or choosing lower-priced sets while still buying the same volume as the year before. This year, volume is up, Christiansen said.
“To the extent that they traded down last year, they haven’t traded down any further,” he said. “So that has stabilized. And we’ve seen most of the growth actually be volume growth.”
Meanwhile, publicly traded rivals Mattel sees net sales falling 1% in the first six months of 2024 and Hasbro reported that the company’s net sales fell 21% from January to the end of June. Mattel is facing tough comparisons to “Barbie”-driven toy sales in 2023, and Hasbro is still reeling from its divestment of eOne.
Lego continues to build on its pandemic-era growth with a diverse product portfolio that caters to both kids and adults. In addition to sets tied to popular brands like Harry Potter and Star Wars, Lego also has creative design options for consumers to build flowers and succulents, famous works of art, and animals.
Christiansen noted that sales in the United States and Europe remained strong, while sales in China remained flat. He said consumers in the region are spending less on more expensive items and are purchasing less frequently.
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 were in China. Similarly, of the 60 stores scheduled to open in the second half of the year, 20 were in China.
Sustainability
Christiansen also praised Lego’s sustainability efforts. So far this year, the company has nearly doubled the amount of renewable and recycled materials used in its bricks compared to all of 2023.
“It’s a good milestone,” he said. “It’s a good step forward. [We are] spend quite a bit on that in some ways, mainly buying more expensive materials, because mass balance materials are more expensive than standard materials.”
Christiansen notes that Lego doesn’t pass that cost on to consumers.
“By actually being willing to pay more for this product, we’ve also created an incentive for [suppliers] to really develop the product and set up more manufacturing capacity for it. We’re really working as an industry to try to accelerate that whole process.”
Within the next few years, Lego hopes to source half of its raw materials from sustainable sources.
