Lego reports strong sales growth, with big rise in China
Lego posted double-digit sales growth in the first half of the year, driven by new store openings and robust demand for its colorful plastic bricks despite rising costs and inflation hitting consumers.
The family-owned Danish company said it had outpaced the toy industry in all major markets during the first six months of the year, when revenue increased 17 percent to $3.48 billion. Operating profit for the period was steady from last year at just over $1 billion.
Lego increased consumer sales by 13 percent in the six-month period compared to 1 percent growth in the global toy market, said CEO Niels Christiansen.
Lego's success has been due to a product portfolio catering to both adults and children, and to a decade-old strategy of placing production close to its key markets – which has been beneficial as the global retail industry has faced supply chain issues, Christiansen said.
Popular toys in the first half of the year included its Star Wars, Harry Potter and Technic sets. "We do really provide very cool and very exciting play experiences that children really, really like. And I think it's really up to our innovation, what we can bring. As you know, half of our product portfolio is new every year, " Christiansen told CGTN.
'China is super-important'
Lego opened 66 new stores in the six-month period, of which 43 were in China, bringing the total number of Lego-branded stores to 833 worldwide.
"China is super-important and it has been and we've been growing very strongly in China. And we have actually managed to continue to grow in China in the first half of the year," said Christiansen.
"But it's been with a lot of uncertainty, a lot of changes," he added. "We have [had] to be very agile around the COVID-19 situation. But we've been continuing to open stores. We have a portfolio that also caters particularly for the Chinese market."
Prompted by higher costs of energy, freight and plastic resin, Lego increased prices for some of its products in August, although products aimed at children had mostly been shielded against price increases, Christiansen said.
The company is running quite a few initiatives especially on the digital side, trying to connect with consumers, both kids and adults, in a different way. It is keen for "shoppers to shop wherever they want" and as a company wants to "become much more digital."
"One of the big initiatives is to create some really exciting experiences in the metaverse, where we can guarantee child safety and bring the attributes of the Lego brand into the digital [sphere] so that we can bridge between the digital experience and the physical experience," said Christiansen.
The company has also moved part of next year's salary increases forward to this year to help employees through a winter with high energy bills, Christiansen said.