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Lego sales are building on pandemic-era growth, boosted by a diverse slate of products that cater to kids and adults alike.
On Tuesday, the privately held Danish toymaker said revenue in 2022 jumped 17%, reaching 64.6 billion Danish krone, or about $9.28 billion.
Lego was among the toy companies that saw massive gains during the pandemic and continues to outperform the industry and zap up market share.
The company wasn’t immune to macroeconomic pressures during the year including the war in Ukraine, Covid restrictions and increased material, shipping and energy costs.
Lego has offset some of those shipping costs by placing manufacturing plants near key markets. For example, the U.S. currently gets its product from a factory in Mexico. That supply chain will shorten in the next two years as Lego opens a new plant in Virginia.
Another factor in offsetting those costs was strong demand for Lego’s eclectic selection of building sets, CEO Niels Christiansen told CNBC.
“People are buying more,” Christiansen said. “It’s not price increases driving it, if anything it’s people buying some of the bigger and more complicated sets. It’s a combination of volume and value.”
Net profit for the full year reached 13.8 billion Danish krone, or about $2 billion, up around 4% from 2021.
Christiansen pointed to the strength of Lego’s brand and its diverse product line that hits on a variety of “passion points” for its strong performance in 2022. These products range from themed sets of Star Wars and Harry Potter to botanical flower arrangements and muscle car replicas.
Around 48% of Lego’s 2022 portfolio was in the new product category, he said. That’s on par with previous years and is part of the company’s strategy for having fresh and relevant sets for all consumers. Sometimes that means tapping into a popular film or television show like “Stranger Things” or expanding its catalog to include buildable wall art.
Christiansen also noted that Lego worked to diversify its price points, as inflation and uncertainty negatively affected consumers over the past year. He said the company looked for ways to offer a wide swath of sets for all budgets.
The company also has been reaping the benefits of opening stores in new markets, particularly in China. In 2022, the company opened 155 shops worldwide, around half of them were in that region. Lego looks to add 145 additional locations in 2023.
Christiansen said store traffic has begun to exceed 2019 levels and noted that in-store experiences remain a high priority for the brand. Lego has always used its brick-and-mortar locations as a place for consumers to explore new products and to get their hands on physical bricks.
Employees are also trained not to upsell guests, but rather to give them an experience. The strategy is based on a belief that customers will leave feeling positive about the brand — an impression that will be uppermost in their mind when they are looking to make future toy purchases.
This has become a key strategy for customers in China, because they have only recently been introduced to Lego bricks.
Online sales also remain important for the company. While it doesn’t share the percentage breakdown between digital and in-store sales, Christiansen said Lego is seeing “good traction” online and its brick and mortar sales continue to fuel its confidence in opening new stores.
Heading into the new year, Lego is looking to continue to snap up market share and to add to its 2022 revenue gains. Christiansen said the company expects growth for the full year to reach high single digits.