February 27, 2019
By Jacob Gronholt-Pedersen
COPENHAGEN (Reuters) – Harry Potter and Star Wars building sets helped Lego return to growth in 2018, along with strong sales in China, where the privately-owned Danish toymaker plans to open new stores.
Sales at Lego, known around the world for its colorful plastic bricks, dropped for the first time in a decade in 2017, but it ended 2018 stronger after gaining market share.
A Lego version of the Star Wars Millennium Falcon space ship was last year’s best seller, while four Harry Potter-themed Lego sets were among the firm’s top-10.
Lego, which competes with toymakers such as Barbie maker Mattel Inc and Hasbro, said on Wednesday that global sales rose by 3 percent last year, while total revenue rose 4 percent to 36.4 billion Danish crowns ($5.5 billion).
“We had aimed to stabilize the business in 2018, but have actually returned to moderate growth on all parameters in a very tough environment,” chief executive Niels B. Christiansen said as operating profit grew by 4 percent to 10.8 billion crowns.
Efforts to combine physical bricks with the digital world, including programming a Lego set to move and augmented reality, had also paid off in 2018, Christiansen told Reuters..
While Lego’s sales increased in all key markets, China was most notable with strong double-digit growth, while the United States and Western Europe returned low-single digit growth.
In China, which still accounts for less than 10 percent of sales, the toymaker plans to more than double the number of stores to 140 this year.
“Right now we’re not really limited by how private consumption is developing in China. It’s more our ability to develop our brand and expand to more Chinese cities that’s driving growth,” Christiansen said.
While online and e-commerce sales continued to grow at the expense of physical stores, Christiansen said these remained key in order to expand the brand’s presence in new markets and give children “that magic experience”.
Lego, which has no shops in India but sells via third party stores, has begun a push into the Middle East and North Africa.
“India is the next big journey for us. It begins now and over the coming three years we’ll begin to invest heavily in India,” Christiansen said.
(Reporting by Jacob Gronholt-Pedersen; Editing by Alexander Smith)