Despite the overall toy industry experiencing declining sales during the first half of 2023, the LEGO Group continued to see sales increases – albeit at a much slower pace than the company has enjoyed in recent years.
They are up just 1% in the first half of 2023. That is a significantly smaller increase than the same period in 2022 (13%) and 2021 (36%). Smaller sales growth is unsurprising after those huge boom years, but presumably the LEGO Group would have liked it to be bigger than 1%.
‘This was especially a good result given the extraordinary double-digit growth rates we’ve had in the three prior years,’ said LEGO CEO Niels B. Christiansen, presenting the results. ‘We are satisfied with our performance; especially as it has been a challenging six months for the toy industry. Demand for our products saw us outpace the industry and significantly grow market share.’
One of the LEGO Group’s long-term strategies is to grow sales in China, by opening more LEGO Stores to acquaint consumers with the brand. Sales there were lower than expected in the first half of 2023, which the company attributes to a slower than predicted return to pre-pandemic shopping habits. By contrast, sales increased in the Americas.
The company’s operating profit is down on the same period in 2022 and 2023 at 6.4 billion DKK (£736 million), but that is still around a third higher than the same period in 2019 and 2020. The LEGO Group is making huge investments in new factories, offices and areas of the business, as part of a strategy for long-term growth.
‘Our strong financial position allows us to invest for the long term, particularly in areas such as digital, sustainability and manufacturing,’ Niels explained. ‘Overall, our performance is in line with expectations, after three consecutive years of extraordinary growth and we are grateful for our great colleagues who work each day to inspire children through play.’
Warehouse upgrades are allowing for more efficient operations, an example being LEGO.com now offering next day delivery for western states in the US. More significantly, two new factories are under construction and existing factories are being upgraded.
Niels concluded by restating the company’s mission: ‘We remain fully focussed on our ambition to inspire and develop more children around the world. We are proud to be in a strong financial position to deliver on this mission today and invest to ensure we continue to deliver for many generations in the future.’