Sales Of Lego Sets Rise 17% As Fans Buy Bigger And More Complex Sets

Lego sales are on the rise, building on pandemic-era growth, buoyed by a wide range of products that cater to kids as well as adults.

The privately held Danish toymaker announced on Tuesday that its revenues in 2022 will have jumped 17%, reaching 64.6 billion Danish kroner, which is equal to roughly $9.28 billion.

During the pandemic, Lego was one of the toy companies that saw massive gains and has since continued to outperform its industry and gain market share as a result.

A number of macroeconomic pressures were felt by the company during the year, including the war in Ukraine, Covid restrictions, and increased material, shipping, and energy costs.

It has been possible for Lego to offset some of the shipping costs by locating its manufacturing plants near key markets. Currently, the United States receives its product from a factory in Mexico, which is the closest factory to the U.S. It is expected that this supply chain will shorten in the next two years when Lego opens its new facility in Virginia.

As well as offsetting those costs, Lego's CEO, Niels Christiansen told Trade Algo that the demand for the company's eclectic collection of building sets contributed to the company's success.

"People are buying more than they used to," Christiansen said. "I don't think it's the price increases that are driving this. If anything, it's people buying some of the bigger and more complicated sets, which are driving the trend. I believe it's a combination of value and volume."

This resulted in a net profit of 13.7 billion Danish kroner (or about $2 billion) for the full year of 2022, an increase of around 4% compared with 2021.

It was pointed out by Christiansen that Lego's brand strength and its diverse product line that hits on a wide range of "passion points" are the reasons for its strong performance in 2022. From themed sets of Star Wars and Harry Potter to botanical flower arrangements and replicas of muscle cars, these products have something for everyone.

In 2022, Lego's 2022 portfolio consists of approximately 48% new products, he said, and that amount is expected to increase. That's a figure that is on par with the previous year's and is part of the company's strategy to ensure that there is always a fresh set available for consumers. There are times when a company wants to expand its product catalog to include buildable wall art or to take advantage of a popular film or television show like "Stranger Things."

Christiansen also stated that Lego is attempting to diversify its price points, as inflation and uncertainty have adversely affected consumers over the past year, as a result of inflation and uncertainty. It is the goal of the company to provide a wide range of sets capable of meeting all budgets, according to him.

Aside from opening new stores in new markets, the company has also reaped the benefits of opening sales offices in new countries, particularly in China. During the year 2022, the company opened 155 stores around the world, and around half of them were located in that region. In the year 2023, Lego plans to add 145 new locations to its network.

In addition, Christiansen noted that store traffic has begun to exceed levels seen in 2019 and that in-store experiences are still a top priority for the brand as it continues to expand. The brick-and-mortar locations of Lego have always been one of the best ways for consumers to explore and discover new products and to be able to touch and play with Lego bricks in real life.

Employees are also trained not to upsell guests, but rather to give them an experience rather than upsell them. A key part of the strategy is built on the belief that customers are likely to leave feeling positive about the brand - an impression that will be at the forefront of their minds when they are looking to make future purchases of toys.

Due to the fact that Lego bricks have only recently been introduced to customers in China, this has become a key strategy for these customers.

For the company, online sales are also still an important source of revenue. Christiansen said Lego is experiencing good traction online and its brick-and-mortar sales continue to fuel its confidence in opening new store locations even though it does not disclose the percentage breakdown between digital and in-store sales.

Lego is looking forward to a successful new year, in which the company is looking to keep gaining market share and grow its revenue in 2022. Throughout the year, Christiansen expects that the company will be able to reach high single-digit growth for the entirety of the year.