Lego, the Danish toymaking giant, has announced a 2% revenue growth for the year 2023, reaching 65.9 billion Danish krone (approximately $9.65 billion). This number was in line with their expectations, the company revealed in a statement.
“It was a difficult year,” Niels Christiansen, the Lego CEO, told CNBC. However, he said the company had “managed to take quite a bit of market share.”
Lego reported a slight decrease in operating profit, from 17.9 billion Danish krone to 17.1 billion, citing increased investments in strategic initiatives aimed at driving growth.
In 2023, the net profit was recorded at 13.1 billion Danish krone, a slight dip from 13.8 billion in the previous year. Despite a downturn in China, consumer sales rose by 4%, according to Lego. The company credited this growth to heightened demand in the U.S. and across central and eastern Europe.
This development occurs amid challenges in the broader toy industry, which has been trying to sustain growth following a surge during the coronavirus pandemic. This period saw parents seeking new entertainment options for their children and adults revisiting childhood hobbies.
Earlier this month, Hasbro, another major player in the toy industry, announced a 15% drop in its 2023 revenue compared to 2022, with expectations of further declines in the coming year.
Opportunities in China
"On the U.S. side I think we’ve seen very, very strong progress,” Christiansen reported. “Even though the market in the U.S. was also negative we actually managed to grow quite comfortably.”
However, Lego faced challenges in China last year. According to Christiansen, this was due to the country's tough economic conditions. While consumers continued to purchase Lego sets, there was a tendency to opt for less expensive options.
Still, Christiansen is optimistic about Lego's future in China, stating, "We are on a growth journey in China and are hopeful and expectant of returning to growth." Part of this growth strategy involves expanding its retail presence, with plans to open approximately 40 new stores in 2024.
Christiansen explained, "Whenever we enter a new city and open a store, initiate brand-building activities, and collaborate with partners, we see positive results."
In 2023, Lego expanded its global footprint by opening 147 new stores, bringing the total to over 1,000. The company plans to add around 100 more stores in 2024. Last year also saw Lego's largest product range to date, with 780 products available, including 390 new releases.
Staying relevant
The most popular ranges included Lego Icons, which was targeted at a slightly older audience and includes sets like the Titanic and Eiffel Tower, Lego’s City line and Lego Technic, which covers builds such as race cars. Its Star Wars and Harry Potter products were also among the most popular lines.
Lego products including flower bouquets and plants have also become popular on social media, garnering millions of likes in TikTok videos, and the company launched a collaboration with popular video game Fortnite featuring Lego’s brick figures and backdrops. Li
censes and collaborations like this are key to Lego’s long-term plans and to “staying relevant and cool with kids,” Christiansen told CNBC. “We want to be there where they are and we want to be providing them with the type of experiences they really love,” he said. “We are competing for children’s time and attention.”
