Lego deals increase while different toy makers face problems

August 31, 2023: Different toy makers face problems with an inflation-increased sales decrease, Lego is building positive results slowly.

The privately held Danish toymaker faced earnings over 1% during the first six months of this year, reaching 27.4 billion Danish krone, or about $4 billion.

Meanwhile, this year, publicly traded competitors such as Mattel, Hasbro, Funko, and Jakks Pacific reported double-digit revenue and sales declines.

“I think what makes me very satisfied is that we continue to outgrow the industry,” CEO Niels Christiansen said. “The good thing for us is that we’ve been outgrowing the market by ten percentage points yearly over the last four or five years. That means we’ve been taking market share consistently, which has continued; that’s super important.”

Toy companies across the industry saw massive gains during the COVID-19 pandemic as parents looked for ways to keep their kids occupied during lockdowns. Adults, too, returned to the toy aisle to stave off boredom.

Lego built on pandemic-era growth, boosted by a diverse slate of products that cater to kids and adults alike while outperforming the industry and zapping up market share.

Of course, the company has not been immune to macroeconomic pressures, notably higher material, shipping, and energy costs.

Net profit for the year’s first half reached 5.1 billion Danish kroner, or about $742 million, down 17% from the same period in 2022.

Raw material costs were a significant expense for the company during the first half of the year, but Christiansen said he expects that to lessen going forward as prices come down.

Lego has offset higher shipping costs by placing manufacturing plants near critical markets. For example, the U.S. gets its Lego products from a factory in Mexico. That supply chain will shorten in the next two years as the company opens a new plant in Virginia.

Additionally, Christiansen said strong demand for Lego’s eclectic selection of building sets has helped narrow the gap. Consumer sales grew 3% during the first half of the year.

Christiansen is focused on the strength of Lego’s brand and its diverse product line that hits various “passion points” for its strong performance in 2023. These products range from themed Star Wars sets to buildable muscle cars and cityscapes.