The toy trade could also be going through a reckoning, however certainly one of its crown jewels isn’t.
Billund-based Lego has powered by 2023, one brick at a time, to rake in sturdy revenues because it continues to see demand for its toys.
The corporate braved a pointy drop in demand for toys proper after the pandemic, when folks—young and old—have been confined to their properties and compelled to entertain themselves.
“We are pleased with our performance given that 2023 was the most negative toy market in more than 15 years,” the corporate’s CEO Niels Christiansen, mentioned in a press release asserting earnings on Tuesday.
The toy market’s gross sales shrunk by 7% globally in 2023 in comparison with a yr earlier, in keeping with Circana information released in January. Whereas that’s nonetheless 17% increased than the pre-pandemic ranges, it factors to shoppers pulling again their spending on leisure gadgets.
Lego reported a 2% growth in revenue, notching up almost DKK 66 billion ($9.7 billion) for final yr, in comparison with a yr earlier. That’s the slowest gross sales development the corporate has seen in seven years, however nonetheless vital given a shrinking market. Throughout the identical interval, client gross sales—a proxy for demand—have been up 4%, because of patrons within the U.S. and elements of Europe who helped offset a hunch from their Chinese language friends.
“We continue to grow our topline, outperform the market, significantly grow market shares, strengthen financial foundation and continue to invest for the future,” Lego’s CFO Jesper Andersen mentioned throughout the firm’s earnings name on Tuesday. He added that the corporate was “building on three years of extraordinary double-digit growth,” because of its stable portfolio and demand from America and European markets.
Since 2019, Lego’s cumulative development fee has been 71%, Andersen highlighted.
Regardless of the expansion in gross sales, the corporate’s income nonetheless dropped 5% in 2023, owing to larger spending on new initiatives and overseas change impacts, Lego mentioned.
Final yr, the 92-year-old firm launched plenty of new digital initiatives, together with the Lego Fortnite video game that brings Lego brick characters in Epic Video games’s flagship franchise. Christiansen mentioned that upon its launch in December, the sport was an immediate hit with 2.4 million folks taking part in it concurrently.
Lego has launched a membership program for its brick-building group and is ramping up its sustainability efforts within the coming years. The Danish group achieved a milestone final yr with over 1,000 shops globally, having opened 147 of them in 2023.
What’s taking place to the world of toys?
It’s not all enjoyable and video games within the toy universe proper now.
Lego might have retained its loyal clients post-pandemic , however its rivals like Hasbro and Mattel haven’t. Rhode Island-based Hasbro’s noticed revenues in 2023 plunged by 15% total and 19% in client merchandise, owing to macroeconomic pressures. It additionally reported an working lack of $1.5 billion for the yr. As for Mattel, regardless of the blockbuster success of the “Barbie” film, its revenue remained flat in 2023 in comparison with a yr earlier.
Loads of what the toy market is experiencing could be blamed on financial volatility, in keeping with Circana’s world toy trade advisor Frédérique Tutt.
“With inflation at the highest level we have seen in decades and birth rates at their lowest in many countries, the global toy industry faced new challenges in 2023,” Tutt mentioned. “Consumers across many regions had to make difficult trade-offs and reduced their spending on toys and games.”
At a time when persons are rejecting non-essential spending, Lego is banking on staying related with its various viewers by revolutionary and sustainable initiatives. We’ll have to attend and watch whether or not that’ll work in holding youngsters and adults coming again.
