Customers at a Lego store in Shanghai, China, February 3, 2024.
Costphoto | Nurphoto | Getty Images
An inflation-fueled 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 announced that its revenue for the first six months of the year jumped 13 percent to 31 billion Danish crowns, or about $4.65 billion.
Niels Christiansen, CEO of the privately held Danish toymaker, told CNBC that the company is seeing strong growth across its portfolio, particularly with Lego Icons and Lego Creator, and through its partnership with Epic Games’ Fortnite.
Last year, Lego saw a trend of consumers “upgrading,” or opting for less expensive sets, while continuing to buy the same volume as the previous year. This year, volume is up, Christiansen said.
“To the extent that they were down last year, they’re not down anymore,” he said. “So it’s stabilized. And we’re seeing 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 sales fell 21% from January to the end of June. Mattel faces tough comparisons with “Barbie”-fueled toy sales in 2023, and Hasbro is still reeling from its eOne divestiture.
Lego has continued to build on its pandemic-era growth with a diverse range of products that appeal to both kids and adults. In addition to sets tied to popular franchises like Harry Potter and Star Wars, Lego also offers innovative design options that allow consumers to build flowers and succulents, famous artwork and animals.
Sales in the U.S. and Europe remain strong, Christiansen noted, while in China, sales are stagnant. He said consumers in the region are spending less on higher-priced items and their purchase frequency is declining.
But Lego is not giving up on its expansion in China. Christiansen believes there is still “long-term potential” in the region.
Of the 40 Lego stores opened in the first quarter, 20 were in China. Similarly, of the 60 openings planned for the second half, 20 are planned in China.
Sustainability
Christiansen also praised Lego’s sustainability efforts. Since the beginning of the year, the company has nearly doubled the amount of renewable and recyclable materials it uses in its bricks compared to 2023.
“This is a big step,” he said. “It’s a big step forward. We’re spending a lot of money on this, including buying more expensive materials, because mass balance materials are more expensive than standard materials.”
Christiansen stressed that Lego does not pass this cost on to consumers.
“By being willing to pay a premium to get this product, we’ve also incentivized suppliers to develop these types of products and establish greater production capacity for these types of products. We’re really working within an industrial need to try to speed up this whole process.”
Over the next few years, Lego hopes to source half of its raw materials from sustainable sources.
