Final hours! Save up to 55% OFF InvestingProCLAIM SALE

Lego classics build growth for Danish toymaker in shrinking market

Published 03/04/2020, 03:02 AM
Updated 03/04/2020, 03:07 AM
Lego classics build growth for Danish toymaker in shrinking market
MAT
-
HAS
-

By Nikolaj Skydsgaard

COPENHAGEN (Reuters) - Model fire stations and garbage trucks helped Lego defy a shrinking toy market with a rise in sales last year, as the plastic brick maker outpaced rivals with the latest versions of its classic kits, as well as new stores and a revamped website.

After a decade of double-digit sales growth skidded to a halt in 2017, family-owned Lego has returned to form since chief executive Niels Christiansen took the helm that year.

The company, which fights for market share in the global toy industry with the likes of Barbie maker Mattel (O:MAT) and Hasbro (O:HAS), said on Wednesday sales rose 6% last year to 38.5 billion Danish crowns ($5.7 billion), up from 3% growth in 2018.

"It was a strong year where we outperformed the toy industry," Christiansen said in a statement.

In February, Mattel reported flat annual net sales, while Hasbro, the firm behind My Little Pony, saw net revenue rise 3%.

Lego estimates the global toy market contracted 3% last year. But it grew sales in all its major markets, including "strong" double-digit growth in China, it said.

The firm, which has 570 stores worldwide, more than doubled its number of stores in China last year to 140. It sees that number rising to 220 this year.

Christiansen told Reuters he would aim for single-digit revenue growth again in 2020, to allow for further investments into IT, new stores and production innovation.

Net profit in 2019 rose just 2.8% to 8.3 billion crowns, partly due to higher expenses, which increased 8.2%.

Despite strong sales from popular licensed Lego products such as "Harry Potter" and Marvel's "Avengers", the top-selling products were from ranges such as Lego City, Lego Classic and Lego Technic that have been around for decades.

"Of course, those are older themes, but as you know, we replace 60% of our products each year," Christiansen said.

"We actually consider these themes 'evergreen', which constantly need to be relevant," he said, adding they gave "play experiences like the one you would get outside your door."

But Lego, an abbreviation of "leg godt" meaning "play well" in Danish, is also banking on technology to stay up to date with new generations.

It saw 27% more traffic on its recently transformed website, and launched "Hidden Side" last year, which combines regular building sets with augmented reality.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.