Lego Builds Market Share as Ever-Popular Toy Bricks Defy Demand Drop
Summary
Lego sales increased last year as the toy-brick maker’s Harry Potter and Fortnite play sets boosted its popularity, helping it outperform and take market share from its rivals despite a slump in global demand.Lego sales increased last year as the toy-brick maker’s Harry Potter and Fortnite play sets boosted its popularity, helping it outperform and take market share from its rivals despite a slump in global demand.
The Danish toy maker saw strong growth in the U.S. and central and eastern Europe, buoyed by its Harry Potter-themed toys and a Fortnite range that recently launched with a video game, bricks and mini figures based on the popular franchise from Epic Games.
This came despite a slump in global toy demand as consumers held off purchases amid inflation-fueled price hikes, while retailers took a cautious approach to shelf stocking.
Lego reported a 4% rise in consumer sales in 2023, outperforming both a 7% drop in the global toy market and the sales performance of it rivals.
Mattel’s sales were flat on the year despite the Barbie runaway box-office hit that boosted its sales of dolls and accessories, while Hasbro, the owner of brands such as Play-Doh and Monopoly, reported revenue that fell 15%.
“2023 was the most negative toy market in more than 15 years," Lego Chief Executive Niels B. Christiansen said. “We significantly outpaced the market, growing share and proving the appeal of our strong, diverse portfolio."
The company expects the toy market to stabilize during 2024 and growth rates to normalize, with shopper behavior returning to pre-Covid buying patterns.
Lego’s overall revenue grew 2% to 65.91 billion kroner ($9.66 billion) last year, but investments in growing global manufacturing capacity, sustainability and expanding into digital toys saw expenses rise, sending net profit down 4.9% to DKK13.11 billion.
It has also been accelerating spending on its retail stores, opening 147 new branded stores last year and bringing the total number of stores globally to over 1,000, with the expansion continuing this year.
A further 100 stores are expected to open in 2024, with around 40 of those in China as the company slows the pace of opening in the country slightly as macro economic conditions weigh on the market.
In 2024, Lego expects single-digit revenue growth ahead of the global toy market, with net profit expected to decline slightly due to increased spending on strategic initiatives, such as sustainability, retail platforms, and digitalization, it said.
Write to Dominic Chopping at dominic.chopping@wsj.com
