Lego’s Profit grows 100% during H12021 – guess why?

A year of being stuck at home; Work from Home; Education from Home; Get togethers at Home; Holiday at Home; and so on. Even as sales of health and hygiene, basic grocery, comfort and lounge wear grew worldwide during the past 18 months, a very likely category of premium toys and games have been one of the biggest beneficiary of the forced lockdown which has downed millions of kids confined at homes. For those who are privileged to have been born in middle and upper middle class families with single or both parents earning, it was an almost “ask-and-thou-shall-be-given” golden period even as adults juggled around with work and household. Add to this, many parents were reluctant to allow their kids continue to play games on mobiles or other devices and preferred them instead to get some fresh air with physical activities. The result is a surge in sales of activities, games and toys, but the biggest surprise is Danish toymaker LEGO reporting 104% increase in its profits for the first half year of 2021.

Niels B. Christiansen, CEO – The LEGO Group, said: “We are very pleased with the progress we made across all areas of the business during the first half. Our performance was driven by strong demand for our portfolio, which has attracted new builders to the LEGO® brand. Our year-on-year growth benefited from fewer COVID-related restrictions compared with 2020 as our factories operated uninterrupted and the majority of retail stores re-opened. We also saw the benefits of multi-year investments in e-commerce, product innovation and a global supply chain network. Our strong financial performance now allows us to accelerate strategic investments in sustainability and digitalisation. Christiansen continued: “We are especially grateful for our amazing team. Despite all the challenges and uncertainties of the past six months, they worked extraordinarily hard to bring play to more families around the world.”

The company operates 737 stores worldwide , including 291 in China, of which 40 stores were opened in 2021. India has a few stores spread across the top metro cities as well. What’s interesting is that the sales through the e-commerce channel, including Lego’s own website as well as third parties grew over 50% during the year compared to the previous one, clearly indicating how its longterm focussed investments in cutting edge technology has finally paid off. The company opened 60 new stores worldwide this CY and assures to keep opening newer ones and with newer formats and themes. For Ex it’s newest store which opened in June at New York has been designed to create an immersive, playful and memorable brand moments.

The brand’s consumer sales grew a phenomenal 46% y-o-y although Christiansen believes that this wouldn’t be a sustainable one, this year being a huge aberration due to lockdown and more playtime. The estimated sales for the first half of the year for LEGO was to the tune of USD 36 Bn and over USD 6 Bn in profits. That’s a lot of money to be made with kids at home and parents joining them in building colourful plastic blocks!