Lego's growth offsets toy industry's annual sales decline

Investing.com -- The toy industry is facing its second straight year of falling sales, but Lego's success is providing a silver lining. As many toy companies struggle to maintain the sales surge seen during the pandemic, Lego, the Denmark-based firm, is experiencing rapid growth. The company's revenue rose by 13% in the first half of the year, enabling it to increase its market share.

Eric Handler, the managing director at Roth MKM, noted that Lego's success is driving the industry's growth this year. After nearly going bankrupt in the early 2000s, Lego has transformed its business and diversified its customer base. This strategy has allowed it to boost sales even amidst inflationary market conditions. The company has reported positive annual revenue growth for the past six years.

Lego's growth strategy has included licensing agreements, targeting adults and children, branching into digital gaming, collaborating with studios and streaming services to deliver Lego content, and building manufacturing sites near distribution hubs to streamline the supply chain.

Among the company's successful products are newly highlighted "passion points," or kits that cater to a broad range of consumers. These include fans of franchises like Star Wars and Harry Potter, car enthusiasts, and animal lovers.

James Zahn, editor in chief of The Toy Book, praised Lego's ability to defy industry trends. According to Zahn, Lego tends to thrive when other companies struggle. He also credited Lego's ability to stay "ahead of the curve" for its agility during inflationary periods, disruptions in the entertainment industry, and potential tariff increases. He suggested that Lego seems to be two to three steps ahead of its competitors.

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Source: Investing.com