Sales and profit increased for the LEGO Group by 20% in 2020, the biggest growth in years, as the company struggled to meet demand during the global pandemic.
The LEGO Group’s CEO, Niels B Christiansen, has presented the company’s financial report for 2020, although as a privately held company, it is headlines rather than details. Consumer sales grew 21%, revenue grew by 13% to DKK 43.7 billion (around $7 billion USD) and operating profit grew by 19% compared on 2019. It’s an extremely successful year for the company, with the growth doubling that of the wider toy industry.
Logic might put the coronavirus pandemic and subsequent stay at home messages at the reason for the growth, but Niels said: “It’s difficult to exactly separate the hot and the cold water and say what is the impact. The prime impact is that we have made the investments behind our strategic initiatives, around portfolio, brand, digital and e-commerce.
“It’s also witnessed by the fact we are outpacing the market – so even though the toy market has seen some growth after two years of decline, we have grown considerably faster than that. Now we have seen of course with kids being schooled at home and families being together a tendency that families have been playing more together and building more together, we have seen sometimes maybe instead of two LEGO City sets then they bought as a family a bigger set. [That’s] a very very positive development. I think there has definitely been an impact around that.
“Now at the same time we have seen long periods of a lot of stores being closed, we have seen disruptions in our supply chain that we had to deal with and we’ve spent a lot of effort on the safety and wellbeing of everybody in the LEGO Group, people that had go into the factories and operate [them], designers coming into offices to make things happen, so I think between the two there’s maybe been things helping people building together, there’s also been disruptions on that and where that comes out I don’t know. I think the most important thing is really that the strategic initiatives are paying off.”
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Visits to LEGO.com doubled during 2020, as more consumers were forced to shop from home rather than in physical stores. The roll-out of brand stores in China did continue, with 91 new stores opened there and 43 opened in other countries.
LEGO Ideas also increased its active users by 50%. “We have a solid digital foundation, but must move faster. The past year has shown the importance of having an agile, responsive business built on strong digital foundations. We will further develop our capabilities in this area so we are well positioned to meet the evolving needs of our retail partners and consumers now, and in the long term,” the CEO said.
He acknowledges that double-digit growth is unlikely again in 2021 – perhaps tacitly admitting that the pandemic did have a positive impact on the business after all – but investment will continue to ensure that the LEGO Group continues to grow:
“For the past two years we’ve made large-scale investments in initiatives designed to support long-term growth. In 2020, we began to see the benefits of these, especially in e-commerce and product innovation. We will further increase investments during the coming year with a continued focus on innovating play, our brand, digitalisation and developing an omnichannel retail network.”
Read more about the LEGO Group’s financial results in Blocks magazine Issue 78, on shelves April 4.