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Fortnite and various block sets have proved to be a significant factor in driving Lego sales up by 13% in the first half of 2024. The popular Danish toy company reported a substantial increase in sales, with revenue reaching 31 billion Danish krone, equivalent to $4.65 billion. The success of Lego Icons, Lego Creator, and the strategic partnership with the popular video game Fortnite have all played a crucial role in driving this growth.
Lego’s CEO, Niels Christiansen, expressed optimism about the long-term potential of the Chinese market, despite challenges such as reduced consumer spending and a decline in big-ticket purchases. He highlighted the importance of targeting the Chinese market and emphasized the company’s commitment to expanding its presence in the region. In fact, on February 3, 2024, customers were seen flocking to a Lego dragon-themed store in Shanghai, China, demonstrating the strong demand for Lego products in the country.
While the toy sector experienced a downturn in sales in the first half of 2024 due to inflation, Lego managed to gain market share and achieve impressive growth. The company’s focus on innovation and product diversification, along with its commitment to sustainability, has set it apart from competitors in the industry. In contrast, publicly listed companies like Mattel and Hasbro faced challenges, with Mattel reporting a 1% dip in net sales and Hasbro seeing a significant decline in net revenue.
Lego’s success can be attributed to its ability to cater to a wide range of customers, from children to adults, with its diverse range of products. In addition to its classic themes such as Harry Potter and Star Wars, Lego has introduced new design options for building flowers, succulents, art pieces, and animals, catering to various interests and preferences. This approach has resonated well with consumers in the U.S. and Europe, where sales have remained strong.
In China, however, Lego has faced stagnant sales, as customers are prioritizing their spending on essential items and buying less frequently. Despite these challenges, Christiansen remains optimistic about the long-term growth opportunities in China and continues to invest in expanding the company’s presence in the region. He highlighted the opening of 40 new Lego stores in the first quarter of 2024, with half of them located in China, and plans to open 20 more stores in the region in the second half of the year.
One key aspect of Lego’s strategy is its focus on sustainability. Christiansen emphasized the company’s commitment to increasing the use of renewable and recyclable materials in its products. In 2024, Lego nearly quadrupled the use of sustainable elements in its bricks compared to the previous year, setting a new milestone for the company. Despite the higher costs associated with sourcing sustainable materials, Lego remains committed to investing in environmentally friendly practices and aims to source half of its raw materials from sustainable sources in the coming years.
In conclusion, Lego’s strong performance in the first half of 2024 underscores the company’s resilience and ability to adapt to changing market conditions. By leveraging popular partnerships like Fortnite and focusing on innovation and sustainability, Lego has managed to drive growth and gain market share, despite challenges in the industry. As the company continues to expand its presence in key markets like China and invest in sustainable practices, it is well-positioned for long-term success and growth.
