Lego income jumps 13% in first half of 2024

An inflation-fueled gross sales hunch hit the toy business within the first half of 2024, however one firm is gaining market share brick by brick.

On Wednesday, Lego mentioned income throughout the first six months of the yr jumped 13%, reaching 31 billion Danish kroner, or about $4.65 billion.

Niels Christiansen, CEO of the privately held Danish toymaker, instructed CNBC that the corporate is seeing energy throughout its portfolio, particularly with Lego Icons and Lego Creator, and thru its partnership with Epic Video games’ Fortnite.

Final yr, Lego noticed a development of customers “buying and selling down” or choosing lower-priced units, whereas nonetheless shopping for the identical quantity because the yr earlier than. This yr, quantity is up, Christiansen mentioned.

“To the extent they traded down final yr, they are not buying and selling additional down,” he mentioned. “In order that has stabilized. And we see nearly all the progress is definitely progress in quantity.”

In the meantime, publicly traded rival Mattel noticed internet gross sales fall 1% within the first six months of 2024 and Hasbro reported that its internet income fell 21% between January and the tip of June. Mattel is dealing with powerful comparisons from toy gross sales fueled by “Barbie” in 2023, and Hasbro remains to be reeling from its divestment of eOne.

Lego has continued to construct on pandemic-era progress with a various slate of merchandise that cater to youngsters and adults alike. Along with units tied to fashionable franchises comparable to Harry Potter and Star Wars, Lego additionally has revolutionary design choices for customers to construct flowers and succulents, well-known artistic endeavors and animals.

Gross sales within the U.S. and Europe stay sturdy, Christiansen famous, whereas China gross sales are flat. He mentioned customers within the area are spending much less on bigger-ticket objects, and their frequency of buying is down.

Nevertheless, Lego will not be giving up on growth in China. Christiansen mentioned there may be nonetheless “long-term potential” within the space.

Of the 40 Lego shops that opened within the first quarter, 20 have been in China. Equally, of the 60 deliberate openings within the second half of the yr, 20 are set for China.

Christiansen additionally touted Lego’s sustainability efforts. Thus far this yr, the corporate has almost doubled the quantity of renewable and recyclable supplies it makes use of in its bricks in comparison with full-year 2023.

“That is a very good milestone,” he mentioned. “That is a very good step ahead. [We are] spending fairly considerably on that in a few methods, primarily in shopping for materials that’s dearer, as a result of mass steadiness materials is dearer than simply customary.”

Christiansen famous that Lego will not be passing that price on to customers.

“By really being prepared to pay a premium to get to this product, we additionally created an incentive for [suppliers] to truly develop the sort of merchandise and to ascertain extra manufacturing capability for these sort of merchandise. We’re working actually as an business have to attempt to put extra pace on that total course of.”

Over the subsequent few years, Lego hopes to supply half its uncooked supplies from sustainable sources.