Brick by brick, Lego has blocked out its rivals and become the largest toy company in the world.
Lego A/S, a Danish toy manufacturer that has been producing its iconic brick sets since 1932, has recently reported nearly twice the revenue of Mattel Inc., maker of Barbie, and Hasbro Inc., creator of Nerf blasters.
Lego has outpaced its rivals through the pandemic, recent supply-chain challenges, and soaring inflation, according to its latest financial report.
The company generated 64.6 billion Danish kroner, equivalent to $9.27 billion, in revenue for 2022, representing a 17% increase compared to the previous year. Net profit also rose 4% to 13.8 billion Danish kroner or $1.8 billion.
Lego’s CEO, Niels Christiansen, credits the company’s recent success to investments made in new stores and digital products.
“I am very satisfied with our performance,” Christiansen said in the Q4 report. “We achieved double digit top line growth and landed the year beyond expectations on the back of exceptional growth last year and despite challenging market conditions. This was due to our relevant brand, a fantastic, diverse portfolio, inspiring shopping experiences and outstanding execution from our teams.”
One of the driving factors behind Lego’s widening gap with its competitors is its success in tapping into new markets, per The Wall Street Journal.
Notably, Lego has been expanding its footprint in China, with more than 90 new retail stores already open and another 80 planned for 2023, according to Paul Huang, senior vice president of the Lego Group and general manager of Lego China, per China Daily.
Lego fans can be any age and from all walks of life. A Reddit dedicated to adult fans of Lego boasts over 26,000 subscribers. Miami-based artist Dante Dentoni even specializes in Lego installations, which have been commissioned across the U.S.
But the company has ensured a steady crop of future Lego fans by reeling younger generations in through collaborations with popular movie and video game brands.
Alongside the Lego City and Icons series, franchise tie-ins with Star Wars and Harry Potter were the bestselling sets in 2022, per the WSJ. The company has also made inroads into the digital realm, with offerings like the Lego Builder app and Lego Star Wars: The Skywalker Saga videogame.
At the same time, as Nintendo Life reported, the development of Lego Star Wars in partnership with TT Games and Warner Bros. Interactive took a toll on employees. While an immense success, with 3.2 million copies sold within two weeks of being launched, other Lego projects planned with TT have been canceled.
Nonetheless, as its performance in 2022 suggests, Lego seems unflappable.
Amid the economic turbulence that has characterized the past year, the company seems shielded from the lackluster results reported by other leading toy makers.
For instance, Mattel’s Q4 earnings dropped 22% and it made only $5.4 billion in sales last year. As for Hasbro, its annual revenue declined by 9% to $5.9 billion.
Lego, on the other hand, saw a 12% growth in sales in 2022, per its Q4 report.
The fact that 48% of Lego’s products were new in 2022 might contribute to these figures, not to mention the fact that it has near-market factories that allow it to sidestep supply-chain disruptions.
The company plans to open a new factory in Vietnam this year and another local manufacturing plant in Virginia in 2025.