A customer reaches for a box from the Lego Dots range at a Lego A/S store in London, UK, on Monday, March 7, 2022.
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Lego sales are building on growth since the pandemic, boosted by a wide range of products that cater to both children and adults.
On Tuesday, the privately held Danish toy maker said revenue in 2022 jumped 17%, reaching 64.6 billion Danish krone, or about $9.28 billion.
Lego was among the toy companies that saw huge gains during the pandemic and continues to outperform the industry and expand market share.
The company was not immune to macroeconomic pressures throughout the year including the war in Ukraine, Covid restrictions and increased material, shipping and energy costs.
Lego has offset some of these shipping costs by placing manufacturing facilities near major markets. For example, the US currently receives its products from a factory in Mexico. That supply chain will shorten in the next two years when Lego opens a new plant in Virginia.
Another factor in offsetting those costs was strong demand for Lego’s eclectic selection of construction sets, CEO Niels Christiansen told CNBC.
“People are buying more,” Christiansen said. “It’s not price increases that are driving it, if anything, it’s people buying some of the bigger, more complex sets. It’s a combination of size and value.”
Net profit for the full year reached 13.8 billion Danish krone, or about $2 billion, up about 4% from 2021.
Christiansen pointed to the strength of the Lego brand and its diverse product line that will hit several “passion points” for its strong performance in 2022. .
About 48% of the Lego 2022 portfolio was in the new product category, he said. That is the same as previous years and is part of the company’s strategy to have new and suitable sets for all users. Sometimes that means using a popular movie or television show like “Stranger Things” or expanding its catalog to include buildable wall art.
Christiansen also noted that Lego was working to diversify its price points, as inflation and uncertainty took a toll on consumers over the past year. He said the company was looking for ways to offer a wide range of seats for all budgets.
The company has also been benefiting from opening stores in new markets, especially in China. In 2022, the company opened 155 stores worldwide, and about half of them were in that region. Lego plans to add 145 more locations in 2023.
Christiansen said store traffic has begun to exceed 2019 levels and noted that interior experiences remain a high priority for the brand. Lego has always used its brick and mortar locations as a place where consumers can explore new products and get their hands on physical bricks.
Employees are also trained not to aggravate guests, but to give them an experience. The strategy is based on the belief that customers will leave feeling positive about the brand – an idea that will be top of mind when they want to buy toys in the future.
This has become a key strategy for buyers in China, as they have only recently been introduced to Lego bricks.
Online sales are still important to the company. While he wouldn’t share the percentage breakdown between digital and in-store sales, Christiansen said Lego is seeing “good traction” online and its brick-and-mortar sales are continuing to grow. encouraging his confidence in opening new stores.
Going into the new year, Lego is looking to continue to increase market share and add to its revenue gains in 2022. Christiansen said the company is growth for the full year is expected to reach high single digits.
