Lego records fastest growth in 5 years thanks to digital transition
Lego had its highest growth rates in five years, as sets combining physical bricks and Super Mario digital games propelled the Danish toy company to record sales and profits in 2020.
The world’s largest toy maker increased revenue 13% to DKK 43.7 billion ($ 7 billion) in annual results, while operating profit jumped 19% to 12.9 billion crowns.
The growth was far greater than that of the private company’s two main listed rivals, Hasbro and Mattel, in the United States, and better than the larger toy market, Lego’s investments in boosting its online sales and l expansion of its product range which has borne fruit.
“I want to ensure that in five or ten years we remain relevant,” said Managing Director Niels Christiansen. “We have to do whatever it takes to stay relevant. Digitally, we are starting to find a formula that works, and I think there is a lot more we can do in this area. ”
Lego has rebounded from a financial meltdown in 2003, taking its garishly colored plastic bricks to China and the United States and expanding its ties with brands spanning Harry Potter and Adidas. But he suffered a falters in 2017 with sales and profits falling for the first time in over a decade due to weak products and operational issues, leading to the appointment of Christiansen as Managing Director.
It first stabilized the ship before investing heavily in Lego’s digital capabilities and its own stores after the bankruptcy of several big chains such as Toys R Us. Although it also had record sales last year , 2020 marks the first year it has surpassed its profit level from the previous high in 2016.
“I am optimistic that we will be able to grow in 2021, not 21% [the amount consumer sales increased by in 2020] but we can still take market share. We can support that, ”Christiansen said.
Lego has just launched its latest mash-up of the physical and the digital via a partnership with Universal Music which allows children to use augmented reality to create music videos for popular songs.
Christiansen said Lego was determined to keep out of complacency. Asked how to avoid the mistakes that led to his problems in 2017, he replied, “It’s still a danger. I can’t say it won’t happen. But the best insurance against this is to make sure that we continue to invest for the long term behind the products, the brand and the digital. “
He added that Lego was hiring hundreds of new employees to work on digital projects, thus helping to digitize the company and its products. He insisted that the physical brick would remain at the heart of the business, but there were opportunities to expand its product portfolio and increase the links between its different applications and digital experiences.