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Lego enjoyed dizzying growth in both sales and profits in the first half of this year as the Danish toymaker proved itself to be one of the winners of the Covid-19 pandemic.
It cemented its position as the world’s largest toymaker by increasing revenues in the first half by 43 per cent year on year to DKr23bn ($3.6bn) and net profit by 140 per cent to DKr6.3bn, both records.
Even though its revenues were only 50 per cent higher than the industry’s number two — Transformers and My Little Pony maker Hasbro — Lego’s net profit was 10 times greater.
Niels Christiansen, Lego’s chief executive, credited big investments in its products, brand, and retail stores rather than Covid-19 pandemic spending for the surge in growth.
“Don’t expect 50 per cent growth year on year on year. But we actually think this is real growth, and this is more a newfound level that we can grow more from,” he told the Financial Times.
Lego has recovered from near financial collapse in 2003 to become the strongest company in the toy industry by far, despite everything centring around one idea — the plastic brick — rather than the hundreds of products that make up the catalogues of listed rivals Hasbro and Mattel. It enjoyed its strongest growth in five years in 2020.
Christiansen, who took over after a small blip in its growth in 2017, has invested heavily in product lines such as Monkie Kid, the company’s first to be based on Chinese culture, and Lego sets that blur the line between physical and digital. He has also put a counter-intuitive bet on own-brand shops, opening hundreds throughout the pandemic.
It recently opened a new flagship store in New York that aims not just to sell Lego sets such as Super Mario, City, or Harry Potter but also create an experience for customers with large-scale models of the city and interactive experiences.
Christiansen said Lego was looking to use its strong position to accelerate its investments even further in areas from potentially more stores to trying to boost its quest to make all Lego bricks sustainable. It had a significant breakthrough in June when it announced it could make its iconic bricks from recycled drink bottles, possibly in the next 18-24 months. “We will basically be looking for areas across the board where we can accelerate,” he added.
The chief executive said he did not concentrate on a single six-month period but was pleased that in his four years in charge Lego had grown at twice the pace of the broader toy market, and now had products for all age groups and interests.
Asked if he was concerned that the company could stumble again as it had in 2017 after a decade of success, he replied: “It’s a fair question. I’m always paranoid, I’m always worried — it’s my nature. But I’m comforted as we’re pushing things that work. We didn’t do this to get a good half year; we did it to get on a sustainable journey. Could there be half-years in the future where we could be down? I think so.”
Lego is privately owned by its founding Kristiansen family and their foundation, and Christiansen credited them with wanting to “invest in the long-term growth of the company”. He also underscored how Lego’s supply chain coped not just with the pandemic but also the high growth thanks to manufacturing in Europe, Asia, and North America.