Lego boosted by increased demand and new store openings
Lego revealed double-digit growth in its trading update on Wednesday, boosted by robust demand and new store openings.
The company, which is the world’s largest toymaker, said revenue for the first half of the year rose 17% to 27bn Danish crowns ($3.48bn), despite rising costs and soaring inflation.
In August, it increased prices for some of its products targeted at older buyers, thanks to higher energy, freight, and plastic resin costs.
However, consumer sales grew 13% with strong performances in the Americas, Western Europe and Asia Pacific.
Customers continued to purchase popular themes such as its Star Wars, Harry Potter, Friends, and Technic sets.
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The double-digit growth outpaced the toy industry in all major markets, while operating profit for the period was steady at 7.9bn crowns.
Lego, which is still owned by its founding family, said its strategy was to focus on expanding its manufacturing capacity and building healthier inventory levels while increasing productivity.
Due to these accelerated investments, free cash flow was DKK 3.8bn, compared to DKK 5.8bn in the same period last year.
It came as Lego opened 66 new stores in the six months to the end of June, 43 of which were in China. This brought its total estate to 833 outlets across the globe.
The firm also strengthened e-commerce capabilities across its own and its partners’ online platforms.
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“We got off to a strong start in 2022 and are very satisfied with our performance which landed above expectations after an exceptional 2021,” Niels Christiansen, group chief executive, said.
“Despite global uncertainties, we continued to deliver higher consumer sales and double-digit top line growth driven by demand for our strong portfolio and execution by our amazing team.”
He added: “For the second half of 2022, we continue to see strong demand for our products. Longer-term we expect top line growth to normalise to more sustainable levels.”
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Lego is celebrating its 90th anniversary this year. In April, the Lego Group announced a long-term partnership with Epic Games which will see the two companies join forces.
Meanwhile, in June it officially opened a digital hub in Copenhagen while growing the global digital team nearly 40% in the first six months of the year.
Over a three-year period, the company intends to triple in size to 1,800 colleagues globally.
