A customer reaches for a box from the LEGO Dots range at a LEGO A/S store on Monday, March 7, 2022 in London, UK.
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Lego’s sales are building on pandemic-era growth, boosted by a diverse slate of products that cater to kids and adults alike.
On Tuesday, the privately held Danish toymaker said revenue would jump 17% in 2022, reaching 64.6 billion Danish krone, or about $9.28 billion.
Lego was among the toy companies that saw massive gains during the pandemic and continues to outperform the industry and grow market share.
The company was not immune to macroeconomic pressures during the year, including the war in Ukraine, COVID restrictions and increased material, shipping and energy costs.
Lego has offset some of those shipping costs by locating manufacturing plants near major markets. For example, the US currently receives its product from a factory in Mexico. The supply chain will shorten over the next two years as Lego opens a new plant in Virginia.
CEO Niels Christiansen told CNBC that another factor in offsetting those costs was strong demand for Lego’s eclectic selection of building sets.
“People are buying more,” Christiansen said. “It’s not an increase in prices, if anything people are buying some of the larger and more complex sets. It’s a combination of quantity and price.”
Net profit for the full year reached 13.7 billion Danish krone, or about $2 billion, up nearly 4% from 2021.
Christiansen pointed to the strength of Lego’s brand and its diverse product line that hits a variety of “passion points” for its strong performance in 2022. These products range from Star Wars and Harry Potter theme sets to botanical flower arrangements and muscle car replicas. ,
He added that about 48% of Lego’s 2022 portfolio was in the new product category. This is on par with previous years and is part of the company’s strategy to keep the sets fresh and relevant for all consumers. Sometimes that means tapping into a popular movie or television show like “Stranger Things,” or expanding its catalog to include buildable wall art.
Christiansen also said that Lego worked to diversify its price points, as inflation and uncertainty negatively affected consumers over the past year. He added that the company is looking for ways to offer a wider range of sets for all budgets.
The company is taking advantage of opening stores in new markets, particularly in China. In 2022, the company opened 155 stores worldwide, about half of them in that region. Lego is looking to add an additional 145 locations in 2023.
Christiansen said store traffic is starting to exceed 2019 levels and noted that the in-store experience is a high priority for the brand. Lego has always used its brick-and-mortar locations as a way for consumers to explore new products and get their hands on physical bricks.
The staff are also trained not to offend the guests, but to give them an experience. The strategy is based on the belief that customers will leave feeling positive about the brand – an impression that will be top of mind when they want to make future toy purchases.
This has become an important strategy for customers in China, as they have recently been introduced to Lego bricks.
Online sales are also important for the company. While it didn’t share a percentage breakdown between digital and in-store sales, Christiansen said Lego is seeing “good traction” online and that its brick-and-mortar sales boost its confidence in opening new stores.
Entering the new year, Lego is looking to continue gaining market share and adding to its 2022 revenue gains. Christiansen said the company expects growth to reach the high single digits for the full year.