The chief executive of Denmark’s Lego on Tuesday reflected on a tough year for the world’s largest toymaker, and outlined the firm’s long-term plans to stay relevant and “cool with kids.”
Lego said its 2023 revenue was 2% higher compared to the previous year, growing to 65.9 billion Danish krone (around $9.65 billion). This was in line with expectations, Lego said in a statement.
“It was a difficult year,” Lego CEO Niels Christiansen told CNBC. However, he said the company had “managed to take quite a bit of market share.”
The Danish toymaker said operating profit declined slightly from 17.9 billion Danish krone to 17.1 billion, noting that it had boosted spending on strategic initiatives designed to drive growth.
Net profit came in at 13.1 billion Danish krone in 2023, compared to 13.8 billion the previous year.
Consumer sales were up 4% despite slumping in China, Lego said, attributing the growth to increasing demand in the U.S. and central and eastern Europe.
It comes as the wider toy industry has been struggling to maintain growth after booming during the coronavirus pandemic, when parents looked for new ways to entertain their children and adults re-discovered childhood pastimes.
Toy company Hasbro earlier this month said its 2023 revenue fell by 15% compared to 2022 and that it expected to see a further decline this year.
Lego sees growth potential in China
“On the U.S. side I think we’ve seen very, very strong progress,” Christiansen said. “Even though the market in the U.S. was also negative we actually managed to grow quite comfortably.”
Nonetheless, Lego struggled in China last year. Christiansen said this was due to the more difficult overall economic conditions in the country. Consumers still bought Lego sets, but often chose one with smaller price points, he said.
Despite this, Christiansen believes there is significant long-term potential for Lego in China.
“We are on the growth journey in China and hoping and expecting to get back to growth,” he said. This includes opening new stores across the country, with around 40 additional stores expected in 2024, he said.
“We know every time we get out to a new city we open a store, we start the brand building activities around, we work with partners, then it gets off the ground,” Christiansen said.
Lego on Tuesday said it had opened 147 stores in 2023, resulting in over 1,000 shops worldwide. Christiansen said around 100 more are expected to open in 2024.
The toymaker said it had its biggest ever product offering in 2023 with 780 available products, around half of which were new releases.
‘Staying relevant’
The most popular ranges included Lego Icons, which was targeted at a slightly older audience and includes sets like the Titanic and Eiffel Tower, Lego’s City line and Lego Technic, which covers builds such as race cars. Its Star Wars and Harry Potter products were also among the most popular lines.
Lego products including flower bouquets and plants have also become popular on social media, garnering millions of likes in TikTok videos, and the company launched a collaboration with popular video game Fortnite featuring Lego’s brick figures and backdrops.
Licenses and collaborations like this are key to Lego’s long-term plans and to “staying relevant and cool with kids,” Christiansen told CNBC.
“We want to be there where they are and we want to be providing them with the type of experiences they really love,” he said. “We are competing for children’s time and attention.”