Lego doubles interim profit by playing to its strengths
Danish toymaker benefits from having production close to its key markets, cutting logistical issues and costs
Copenhagen — Toymaker Lego doubled its earnings in the first six months of the year as customers flocked to its reopened stores to buy Star Wars building sets, model Colosseums and flower bouquets made from its colourful plastic bricks.
While parts of the global retail industry are still reeling from the pandemic and related supply chain issues, Lego says it has benefited from its decade-old strategy of placing production close to its key markets, cutting logistical issues and costs.
“It has made us somewhat more resilient, since we have not had to send everything around the world urgently,” CEO Niels Christiansen said, noting that the company has five large factories covering Asia, Europe and the Americas.
The family owned company experienced a surge in online sales during the pandemic but it reiterated on Tuesday it would continue to bet on physical stores to attract new customers.
“If anyone doubted whether stores would still have relevance on the other side of Covid-19, we have simply seen both traffic and revenue come back into stores,” Christiansen said.
Lego said it outpaced the toy industry in all major markets during the first six months of 2021 as production was uninterrupted by Covid-19 restrictions and most of its physical stores reopened.
Based in Billund, Denmark, Lego expects to open 174 new stores around the world this year, reaching 851 stores in total. Last year, Lego opened 134 stores. In the first half of this year it opened 60 more outlets.
Popular building sets in the first half of the year were Lego Star Wars and the advanced Lego Creator Expert sets, which include flower bouquets and a model of Rome’s Colosseum. They have become popular among adults stuck at home during lockdown periods.
Lego also opened a new flagship store in Manhattan, New York, in June, where customers are able to interact with Lego products, both physically and digitally, to design new Lego figures or create a Lego model of one’s face.
The new store format will be introduced to about 60 stores this year. “It’s less about selling products, more about showing the entire Lego universe to consumers,” Christiansen said.
Despite facing rising costs for freight and raw materials, Lego more than doubled its operating profit in the first six months of this year to 8bn kroner compared with the same period last year.
Revenue grew 46% to 23bn kroner and online sales across all platforms grew 50% from the same period last year, Lego said. It did not give a figure for online sales or their proportion of total sales.
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