Lego has reported that profits increased by 5% in 2022 from a year earlier and sales rose, with growth in all markets.
The company said net profit rose to $2b. Sales were up 12%, while revenue grew 17% to $9.2b. CEO Niels B. Christiansen called 2022 “a milestone year” as the company celebrated its 90th anniversary, saying the company “landed the year beyond expectations on the back of exceptional growth last year and despite challenging market conditions.”
Lego increased prices on about a quarter of its products, due to inflation, but Niels added: “Low-cost products were not affected. The increase was chiefly on our expensive products. Despite that, we saw our sales increase.”
The group said it had been affected by macroeconomic pressures during the year – including the war in Ukraine and increased material, shipping and energy costs – but has been working towards offsetting some of those costs by introducing manufacturing plants near key markets. The US supply chain will shorten in the next two years as Lego opens a new plant in Virginia, rather than use the factory in Mexico that currently supplies the region.
Continued strong demand for its product range, among both children and adults has helped maintain sales, and Niels said this was partly down to the breadth of the product that Lego currently offers. “People are buying more,” he said. “It’s not price increases driving growth, if anything it’s people buying bigger and more complicated sets. It’s a combination of volume and value.”
Lego’s diverse product line has been designed to hit on a variety of “passion points” which have helped its strong performance in 2022. These products range from themed sets of popular licences such as Star Wars and Harry Potter to botanical flower arrangements and muscle car replicas. Last year, new products made up 48% of the company’s range as part of the company’s strategy for having fresh and relevant sets for all consumers. Lego has also worked to diversify its price points, as inflation and uncertainty negatively affected consumers over the past year, offering sets for all budgets.
Lego said that there was growth in all markets, particularly in the Americas and Western Europe. The company opened 155 stores worldwide last year to reach 904 locations in more than 130 countries. Around half of the new openings were in China, and Lego is planning to add 145 additional locations worldwide in 2023.
With store footfall beginning to exceed 2019 levels, in-store experiences (such as the recent Lego Friends activations) remain a high priority for the brand. Online sales were also said to be seeing “good traction”.
Collaborations with other high profile brands were highlighted , including one with Louis Vuitton to create windows and store displays for the Christmas season tied to the 200th birthday of the luxury fashion house. “By doing a partnership with others, we can reach customers in a different way,” added Niels. “In the case of Louis Vuitton, we hope to reach women, mothers. We hope to have more girls playing with Lego.”
This year, Lego said it expects high single-digit revenue growth.
