Lego has reported a 4% global sales increase for the first six months of 2019, citing Avengers and Lego Movie 2 sets as particularly strong sellers.
Consumer sales in established markets such as the UK and the US also showed an increase during the first six months of the year, according to the report, as the company enjoys encouraging sales recovery following a recent dip in profits.
Niels Christiansen, Lego’s chief executive, said: “We are satisfied with our performance given the transformative shifts which continue to reshape the global toy industry. We continue to grow consumer sales and market share in our largest markets.”
Although global sales were up 4% at £1.8b in the first six months of the year, operating profits declined 16%, as the company invested in its web operation and new store openings. Lego expects to have opened more than 70 new stores globally by the end of the year. This includes an extensive store opening programme in emerging markets including China and India; Lego has plans in place to have 140 stores in 35 different Chinese cities over the coming months and will open an office in India, as the company seeks to expand in the region. Niels believes there is huge potential in both markets. “Within 10 years, there will be 100m kids in India, living in middle class families. They are strong into education, and products like Lego are very high on the wish list,” he said, “There are also many Chinese kids that don’t know Lego and whose parents don’t know Lego, so we see a real opportunity there.”
The company stated that the sacrifice in operating profits was an “active choice” in order to continue gaining market share and lead change.
As sales of Avengers and Lego Movie 2 lines have boosted the company, along with stalwart City and Technic ranges, Lego has also been investing in “digital play experiences”, such as the Hidden Side series which combines traditional building with an augmented reality app. “It’s never just about the physical products,” explained Niels. “It’s about the entire experience. It’s extremely important we stay relevant and cool.”
The company is working with UK retailers to avoid stock issues this Christmas in case of a no-deal Brexit, as potential risks such as delays and higher prices are closely monitored. Lego imports into the UK from the Czech Republic, Denmark and Hungary, and so could be at risk from new trade barriers. The firm declined to comment on whether its Christmas pricing might be affected.
Lego has also invested heavily in e-commerce, updating its online platforms and enhancing its VIP loyalty programme to work across all the company’s websites.
“We want to ensure that we stay really relevant even though there will still be changes in the retail landscape. We still need kids to discover Lego,” added Niels. “Being ahead of these trends will allow us to inspire future generations of children.”
