A customer picks up a box of the Lego Dots range at the Lego A/S store in London, UK, Monday March 7, 2022.
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Lego sales are building on pandemic-era growth, boosted by a diverse line of products that appeal to children and adults alike.
On Tuesday, the privately owned Danish toymaker said its revenue in 2022 jumped 17% to 64.6 billion Danish kroner, or about $9.28 billion.
Lego was among the toy companies that made massive gains during the pandemic and continues to outpace the industry and gain market share.
The company was not immune to macroeconomic pressures during the year, including the war in Ukraine, Covid restrictions and rising material, transport and energy costs.
Lego has offset some of these shipping costs by placing manufacturing plants near key markets. For example, the United States currently gets its product from a factory in Mexico. This supply chain will shorten over the next two years when Lego opens a new factory in Virginia.
Another factor offsetting those costs has been strong demand for Lego’s eclectic selection of building sets, CEO Niels Christiansen told CNBC.
“People are buying more,” Christiansen said. “It’s not the price increases that’s driving it, it’s more people buying some of the bigger, more complicated sets. It’s a combination of volume and value.”
Net profit for the full year reached 13.7 billion Danish kroner, or about $2 billion, up about 4% from 2021.
Christiansen highlighted the strength of the Lego brand and its diverse product line that hits a variety of “passion points” for its strong performance in 2022. These products range from Star Wars and Harry Potter themed sets to botanical flower arrangements and muscle car replicas. .
About 48% of Lego’s 2022 portfolio was in the new product category, he said. This is on par with previous years and is part of the company’s strategy to have fresh and relevant sets for all consumers. Sometimes that means tapping into a popular movie or TV show like “Stranger Things” or expanding its catalog to include buildable wall art.
Christiansen also noted that Lego has been working to diversify its pricing as inflation and uncertainty have negatively affected consumers over the past year. He said the company is looking for ways to offer a wide range of sets for all budgets.
The company has also reaped the rewards of opening stores in new markets, notably in China. In 2022, the company opened 155 stores globally, about half of which were in this region. Lego is looking to add 145 more locations in 2023.
Christiansen said in-store traffic has started to exceed 2019 levels and noted that in-store experiences remain a high priority for the brand. Lego has always used its physical locations as a place where consumers can explore new products and get their hands on physical bricks.
Employees are also trained not to sell guests, but rather to give them an experience. The strategy is based on the belief that customers will leave with a positive feeling about the brand – an impression that will be most prominent in their minds when looking to make future toy purchases.
It has become a key strategy for customers in China, as they have only recently discovered Lego bricks.
Online sales also remain important to the company. While he wouldn’t share the percentage split between digital and in-store sales, Christiansen said Lego is seeing “good traction” online and its physical sales continue to fuel his confidence in the opening of new stores.
As the new year approaches, Lego is looking to continue to gain market share and add to its revenue gains in 2022. Christiansen said the company expects growth for the entire l year hits high single digits.