Munich Brick by brick: The Lego principle has remained unchanged for more than 70 years. Nevertheless, business is excellent even in turbulent times – and better than its rivals by classes. The turnover of the world’s largest toy manufacturer increased last year by 17 percent to the equivalent of 8.7 billion euros. For comparison: the German toy market fell by five percent in 2022.
Lego’s profit climbed four percent to a record 1.8 billion euros. “We have exceeded our own expectations,” said CEO Niels Christiansen on Tuesday.
The Danish family company has outclassed its most important competitors. Hasbro’s sales shrank by nine percent to $5.9 billion in 2022. The US group’s net profit collapsed by more than half to $204 million. The Americans therefore announced at the beginning of the year that they would lay off 15 percent of the workforce. Hasbro owns brands like Monopoly or Nerf.
Lego operates 900 of its own stores
The number three in the industry, Mattel, has done a little better: the Barbie manufacturer’s revenues have stagnated. However, profit has more than halved.
Sales at the leading German toy manufacturers Ravensburger and Simba-Dickie also fell in 2022. As in Germany, masses of remote-controlled cars, dolls and jigsaw puzzles remained on the shelves around the world due to a noticeable reluctance to buy. The retail giant Otto has just announced the end of its daughter Mytoys.
>> Read here: Otto closes subsidiary Mytoys and lays off 800 employees
So what are the Scandinavians doing better than their competitors? “The momentum that we have seen in recent years has continued in 2022,” explained Christiansen. “It was driven by the investments made during this time, which are paying off today and creating the basis for long-term, sustainable growth.”
In contrast to its competitors, Lego relies heavily on self-operated shops. Last year the brand opened 155 new stores. In total, consumers can now shop at 904 Lego stores worldwide.
The Scandinavians also produce in their own factories and therefore have a better grip on the supply chain. Lego has built a new plant in Vietnam, and Christiansen has announced a new building for the USA.
The Lego boss presents excellent figures.
(Photo: imago images/Ritzau Scanpix)
Most competitors source their products from contract manufacturers. That’s why they have to decide at the beginning of the year how much they need for Christmas. In recent years, this has resulted in many brands either not being able to supply enough or having too much in stock.
Lego wants to grow faster than the competition again
Lego is owned by the Danish Kristiansen family through their investment company Kirkbi and their foundations. Thomas Kirk Kristiansen, 43, is Chairman of the Board of Directors.
CEO Christiansen believes that Lego will not grow so rapidly this year. The manager expects a plus in the single-digit percentage range. But that is still more than can be expected in the toy market as a whole. In fact, the competition would be satisfied if things didn’t go further down: He hopes that “everything will be reasonably normal this year,” said Clemens Maier, head of the Ravensburger game publisher.
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