A customer reaches for a box from the Lego Dots range at the Lego A/S store in London, U.K., on March 7, 2022.
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The toy industry is headed for its second consecutive annual sales decline, but it’s got one thing propping it up: colorful, interlocking plastic bricks.
At a time when toy companies are struggling to match the massive gains of pandemic-era sales, Lego is growing rapidly. The Danish company saw revenue jump 13% in the first six months of the year and continues to snap up market share.
“When you look at toy sales, Lego has just been driving all the growth in the industry this year,” said Eric Handler, managing director at Roth MKM.
After coming to the brink of bankruptcy in the early 2000s, Lego has reshaped its business and diversified its customer base, helping it to elevate sales even in inflationary market conditions.
Lego has posted positive annual revenue growth in each of the past six years.
Its strategy has involved delving into the world of licensing, catering to adults as well as kids, tapping into the digital gaming world, partnering with studios and streamers to bring Lego content to consumers and building manufacturing sites close to distribution hubs to smooth the supply chain.
Recent standouts among its tried-and-true portfolio are newly emphasized “passion points,” kits that appeal to a wide variety of consumers, from those obsessed with franchises such as Star Wars and Harry Potter to car enthusiasts and animal lovers.
“Lego has consistently bucked the trend the past few years,” said James Zahn, editor in chief of The Toy Book. “When other companies go down, Lego tends to go up.”
Zahn noted that Lego’s ability to be “ahead of the curve” has allowed it to be more nimble during times of inflation, as consumers tighten their purse strings, and to navigate upheaval in the theatrical entertainment industry and even looming tariff increases.
“I think, perhaps, the overarching story here is that they really are, it seems, like they’re two to three steps ahead of everybody else,” Zahn said.
before we started saying ‘kidults,’ and they’ve managed to continue that in new ways,” said Zahn.
Over the past two decades, Lego has worked with hundreds of other partners to translate the likes of Harry Potter, Lord of the Rings, Ghostbusters, Marvel, DC, Jurassic Park and Pixar into building blocks.
More recently, the company has launched kits such as the Sanderson sisters’ house from “Hocus Pocus” and even a “Jaws” set featuring the iconic shark taking down Quint’s boat.
“For the Lego brand, [we’ve seen] tremendous years of growth,” said Julia Goldin, chief product and marketing officer at Lego. “We made a very deliberate decision to unlock our potential with many new audiences, double down on the audiences that we already had and really ensure that we are very connected.”
repeatedly touted the importance of meeting kids where they are, noting during previous earnings reports that the company is competing for children’s time and attention. Being relevant to them and in spaces that they already occupy has translated back to sales of physical Lego kits.
It is a similar strategy to the one Lego has employed in partnering with Disney+ for several Star Wars and Marvel animated shows and in its recent theatrical release of a feature-length animated documentary about Pharrell Williams called “Piece by Piece.”
