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LEGO Caps Breakout Year With 13% Growth

By Gary Symons

TLL Editor in Chief

The LEGO Group has been on a tear throughout fiscal 2020, launching new and innovative products, signing key licensing deals, and continuing its run as one of the world’s top kids’ entertainment companies.

That success has also translated into growing revenue, as the European tosco reported a 13% increase in revenue to $7 billion, at a time when some other toy companies have struggled. Both Hasbro and Jakks Pacific reported decreases in revenue this year, which were blamed largely on supply chain issues stemming from the COVID-19 pandemic. However, top rival Mattel also reported an extremely strong year for revenue, and the toy industry as a whole saw increased revenues of from January through December 2020.

LEGO says its consumer sales grew by 21% with a 19% increase in operating profit to US$2 billion, as well as a 19% bump in its net profit, which increased to $1.5 billion.

Consumer sales in all market groups grew double digits, LEGO says, with especially strong growth in China, the Americas, Western Europe and Asia Pacific.

Growth in operating profit was driven by strong sales, but was also offset by strategic investments and increased distribution costs, as COVID-19 disrupted global supply chains, which included temporary production shutdowns in both Mexico and China.

As reported earlier this year in The Licensing Letter, The NPD Group reported that the toy industry enjoyed an increase in traditional toy sales of 10.4 per cent. That number was higher in some markets like the United States, which saw a 16% increase, and lower in others like the UK, which saw a 5.5% rise. LEGO says that overall rise in the global toy market was a large part of the increased revenue for the company. NPD said its research shows that families spent more on toys due to restrictions that kept children at home, and for LEGO that translated to a huge increase in e-commerce visits. In 2020 the LEGO.com logged 269 million visits in 2020, almost double the total in 2019.

NPD and other experts also said that toys with a lot of ‘replay’ potential were topping the best seller charts, and replay is an essential element of the Danish toy brickmaker’s mantra. This year the company said its best selling products included LEGO Star Wars, LEGO City, LEGO Classic, LEGO Friends and its Technic brand, which allows consumers to build real-life machinery like steering systems and gearboxes. LEGO also saw a lot of success with its critically acclaimed Super Mario products, and the LEGO Mindstorms sets that were relaunched in 2020.

“For the past two years we’ve made large-scale investments in initiatives designed to support long-term growth. In 2020, we began to see the benefits of these, especially in e-commerce and product innovation,” CEO Niels B Christiansen said. “We know children and adults love the LEGO brick and that will always be the heart of our business. But today’s children are growing up in a digital world and they effortlessly blend online and physical play. We are excited to offer them safe, exciting play experiences that are fun and offer new ways to learn and be creative.”

Despite the success of its e-commerce platform, LEGO bucked the global trend by opening a staggering 134 new stores around the world this past year, bringing its total number of retail outlets to 678, and the company plans to launch another 120 stores in 2021, or 10 every month, on average.

However, much of that growth occurred in China, where LEGO had very little retail presence. Of the new stores opened last year, 91 were in China, and 80 of the stores planned to open this year will also be in China.

Despite its strong growth in 2020, LEGO does not anticipate growth occurring at the same rate this year, as the company predicts it will enjoy ‘single-digit growth’.

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