A customer reaches for a box from the Lego Dots range at the Lego A/S store in London, UK, on Monday, March 7, 2022.
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Lego sales are building on the growth of the pandemic era, boosted by a diverse range of products for both children and adults.
On Tuesday, the privately owned Danish toymaker said its sales had risen 17% in 2022 to DKK 64.6 billion, or about $9.28 billion.
Lego was one of the toy companies to make huge profits during the pandemic and continues to outperform the industry and gain market share.
The company was not immune to macroeconomic pressures during the year, including the war in Ukraine, Covid restrictions and higher material, shipping and energy costs.
Lego has offset some of that shipping cost by placing factories near key markets. For example, the US currently sources its product from a factory in Mexico. That supply chain will shorten over the next two years as Lego opens a new factory in Virginia.
Another factor in offsetting that cost was strong demand for Lego’s eclectic selection of building sets, CEO Niels Christiansen told CNBC.
“People are buying more,” Christiansen said. “It’s not price increases that are driving it, it’s people buying some of the bigger and more complicated sets. It’s a combination of volume and value.”
Net profit for the full year was DKK 13.7 billion, or about $2 billion, an increase of about 4% from 2021.
Christiansen pointed to the strength of the Lego brand and its diverse product line that touches several “passion points” due to its strong performance in 2022. These products range from Star Wars and Harry Potter themed sets to botanical floral arrangements and muscle car replicas. .
About 48% of Lego’s 2022 portfolio fell into the new product category, he said. That’s similar to previous years and part of the company’s strategy to have new and relevant sets for all consumers. Sometimes that means using a hit movie or television show like “Stranger Things” or expanding the catalog with buildable wall art.
Christiansen also noted that Lego was working to diversify its price points as inflation and uncertainty negatively affected consumers over the past year. He said the company was looking for ways to offer a wide variety of sets for all budgets.
The company is also reaping the benefits of opening stores in new markets, particularly China. In 2022, the company opened 155 stores worldwide, about half of them in that region. Lego wants to add 145 additional locations in 2023.
Christiansen said store traffic is beginning to exceed 2019 levels, noting that in-store experiences remain a high priority for the brand. Lego has always used its physical locations as a place for consumers to discover new products and get their hands on physical bricks.
Employees are also trained not to upsell guests, but to give them an experience. The strategy is based on the belief that customers will leave a positive feeling about the brand – an impression they will keep most in mind when making future toy purchases.
This has become an important strategy for customers in China as they have only recently become acquainted with Lego bricks.
Online sales also remain important for the company. While it doesn’t share the percentage breakdown between digital and retail sales, Christiansen said Lego is seeing “good traction” online and physical sales continue to fuel confidence in opening new stores.
Heading into the new year, Lego aims to continue increasing its market share and contributing to revenue growth in 2022. Christiansen said the company expects full-year growth to reach high single digits.