July 26, 2021

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Lego gross sales soared in 2020, helped by e-commerce and China development

A boy selects a boxed Lego A/S toy at an E-Mart Co. retailer, a subsidiary of Shinsegae Co., in Incheon, South Korea, on Saturday, Dec. 21, 2013.

Bloomberg | Getty Photographs

There is not any doubt that the Lego model has benefited from individuals spending extra time at dwelling through the pandemic, however the firm is profitable new enterprise in China as nicely.

Lego mentioned Wednesday that its client gross sales jumped 21% final 12 months, the results of a broader product vary, e-commerce investments paying off and a surge of development in China.

“It’s actually a results of an incredible effort by the whole group, particularly with all of the issues we have had to deal with all year long,” CEO Niels Christiansen instructed CNBC.

As a result of pandemic, Lego was pressured to shut manufacturing websites in Mexico and China, quickly shutter some retail areas and noticed its distribution prices rise as delivery turned costlier.

Regardless of these headwinds, the privately held Danish toymaker reported income for the 12 months that topped 43.7 billion Danish krone, or about US$6.99 billion, up 13% in contrast with 2019.

Prime-sellers ranged from traditional Lego units to themed product from Nintendo’s Tremendous Mario and Disney’s Star Wars, Christiansen mentioned.

“Our analysis does present that extra households are constructing collectively,” he mentioned.

Whereas the pandemic could have inspired customers to purchase extra Lego units to go the time in lockdown, Christiansen mentioned, it isn’t the one purpose gross sales had been so robust through the 12 months. The corporate is reaping the advantages of investments in its e-commerce enterprise and new markets.

The variety of visits to Lego.com final 12 months doubled from the 12 months prior, as lots of Lego’s bodily shops had been pressured to quickly shut. Prospects had already been gravitating extra to on-line purchasing, however the coronavirus outbreak has accelerated the tendencies and it possible will not be reversed.

“I am unsure it is going to return,” Christiansen mentioned.

A novel play expertise that mixes the open artistic play of LEGO constructing toys for youths with an augmented actuality app.

LEGO

Lego is ramping up recruitment for its digital and tech groups, Christiansen mentioned. The corporate finally needs to have the ability to develop merchandise at a sooner tempo and create platforms to accommodate Lego content material and for built-in play.

Nonetheless, conventional shops stay a key a part of the model’s technique. Lately, the toymaker has made a push into the Chinese language market, opening dozens of bodily areas.

Whereas Lego has been a part of the tradition in different areas just like the U.Ok. and the US, mother and father in China didn’t develop up with the enduring coloured blocks. And so, having locations the place children can go and get their palms on the bricks and see the units that may be constructed has been a boon to gross sales.

“Children get to see what Lego is and play with it,” Christiansen mentioned. “It is a model constructed on the bodily.”

In 2020, Lego opened 134 retail areas, 91 of which had been in China. The corporate presently has 678 Lego branded shops globally and has plans so as to add one other 120, together with 80 in China. The intention is to have round 300 Lego shops in China by the top of 2021.

China is already one of many firm’s greatest markets, boasting double-digit development within the final 12 months.

Christiansen famous that sustaining the robust development of 2020 will not be straightforward, however that the corporate is well-positioned to proceed being a dominant power within the international toy trade.

“I would not wager on 21% once more, however what I do assume is that if we proceed our long-term investments, then I imagine now we have the possibility to outperform the market and take share,” Christiansen mentioned.

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