LEGO Maintains Strong Revenue in 2023 Despite Trade-Downs and China Pullback

According to data from Circana, The LEGO Group had a 2% growth last year, despite the toy industry seeing a drop in sales of 7% across the world, as per a CNBC report.

The growth from the pandemic that expedited sales in the toy industry dropped in 2023 when consumers took a step back from spending as inflation and credit card debt spiked up. On Tuesday, however, LEGO, which is based in Denmark reported strong sales, with a turnover hitting 65.9 billion Danish krone which is around $9.65 billion.

LEGO CEO Niels Christiansen told CNBC, “Being able to again outgrow the market by almost 10 percentage points, like we’ve done the last couple of years, I think it’s really nice to see that we could do that in good years, and we can also do it in bad years.”

LEGO was prominent as one of the toy companies that saw significant gains during the COVID-19 pandemic and continues to outpace the industry, securing a larger market share. The company witnessed a sales surge of 27% in 2021 and maintained robust growth at 17% in 2022.

Among the company’s brands, top-performing ones include LEGO Icons, LEGO City, LEGO Harry Potter, LEGO Star Wars, and LEGO Technic. Offering a variety of sizes and challenge levels, LEGO asserts that these themes not only provide entertainment but also foster learning in building skills for children while serving as a creative outlet for adults.

In the previous year, LEGO introduced 780 products, with half of them being new additions. This output aligns with the company’s long-standing strategy of maintaining a steady stream of fresh and relevant sets for all consumers, a practice consistent and in line with its approach in previous years.

However, the company hasn’t been unaffected by macroeconomic pressures, especially as consumers become more cautious with their spending. Christiansen said that while LEGO is selling the same volume of products, there’s been a clear trend of customers trading down in 2023, opting for lower-priced sets.

The company’s net profit in 2023 hit 13.1 billion Danish krone, which is around $1.92 billion, down almost 5% from 2022.

The key Chinese market saw profits drop. Christiansen said, “Chinese consumers are really holding back on spending.”

LEGO has been expanding its presence in China over the last few years by opening hundreds of retail locations. Even though the company initially made its way into the country in 1993, it was only over the last 10 years that it started to expand broadly in the region.

LEGO has been innovative by growing its digital presence, collaborating with Epic Games to release LEGO Fortnite, an open-world survival video game. Christiansen said, “We’re basically competing for children’s time and their attention and being relevant with them.”

LEGO announced that its team of digital experts grew by 27% in 2023, reflecting the company’s emphasis on expanding online experiences across various domains, including shopping and television and film content. The main aim remains to seamlessly integrate these digital touchpoints with physical play.

Christiansen said, “At the end of the day, they may spend a little bit on LEGO Fortnite or wherever, but I hope when it gets to Christmas that we are on their wish list.”