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Lego posts strong growth on robust demand, new store openings
Global Banking & Finance Review®
Company
By Jacob Gronholt-Pedersen
COPENHAGEN (Reuters) – Lego on Wednesday posted double-digit sales growth in the first half of the year, driven by new store openings and robust demand for its colourful plastic bricks despite rising costs and inflation hitting consumers.
The family-owned company said it had outpaced the toy industry in all major markets during the first six months of the year, when revenue increased 17% to 27 billion Danish crowns ($3.48 billion).
Operating profit for the period was steady from last year at 7.9 billion crowns.
“We’ve gained market share every month in all our major markets, and we’re growing significantly faster than our competitors,” Chief Executive Niels Christiansen told Reuters in an interview.
“We enter the peak Christmas season with good momentum,” he said.
The Danish company opened 66 new stores in the six-month period, of which 43 were in China, bringing the total number of Lego branded stores to 833 worldwide.
Prompted by higher costs of energy, freight and plastic resin, Lego in August increased prices for some of its products, although products aimed at children had mostly been shielded against price increases, Christiansen said.
Lego increased consumer sales by 13% in the six-month period compared to 1% growth in the global toy market, Christiansen said.
Lego’s success was due to a product portfolio catering to both adults and children, and to a decade-old strategy of placing production close to its key markets, which has been beneficial as the global retail industry has faced supply chain issues, Christiansen said.
Popular toys in the first half of the year included its Star Wars, Harry Potter, and Technic sets.
The company has also moved part of next year’s salary increases forward to this year to help employees through a winter with high energy bills, Christiansen said.
($1 = 7.7559 Danish crowns)
Read more:
Lego closes Russia business indefinitely, lays off 90 staff
Lego to invest over $1 billion in U.S. brick plant
(Reporting by Jacob Gronholt-Pedersen; Editing by Lisa Shumaker)
Sales growth refers to the increase in sales revenue over a specific period, often expressed as a percentage. It indicates how well a company is performing in generating sales.
Operating profits are the earnings a company makes from its core business operations, excluding any income derived from non-operating activities such as investments or sales of assets.
Market share is the portion of a market controlled by a particular company or product. It is often expressed as a percentage of total sales in that market.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI).
A product portfolio is the collection of all the products and services that a company offers. It reflects the company's strategy and market positioning.
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