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Lego gross sales rose in 2020 because of e-commerce and progress in China

A boy selects a Lego A / S toy in a box in a store of E-Mart Co., a subsidiary of Shinsegae Co., in Incheon, South Korea, on Saturday, December 21, 2013.

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There’s no doubt that the Lego brand benefited from people spending more time at home during the pandemic, but the company is also gaining new business in China.

Lego said Wednesday that consumer sales rose 21% over the past year. This is the result of a wider range of products, paying off e-commerce investments, and a surge in growth in China.

“It’s really the result of a tremendous effort by the entire organization, especially with all of the things we’ve struggled with all year,” CEO Niels Christiansen told CNBC.

The pandemic forced Lego to close manufacturing facilities in Mexico and China, temporarily close some retail locations, and increase distribution costs as shipping became more expensive.

Despite this headwind, the privately owned Danish toy maker reported annual sales of over 43.7 billion Danish kroner, or around 6.99 billion US dollars, an increase of 13% over 2019.

The top sellers ranged from classic Lego sets to themed products from Nintendo’s Super Mario and Disney’s Star Wars, said Christiansen.

“Our research shows that more families are building together,” he said.

While the pandemic may have encouraged consumers to buy more Lego sets to help pass the lockdown period, Christiansen said, it’s not the only reason sales have been so strong over the year. The company benefits from investing in its e-commerce business and new markets.

The number of visits to Lego.com over the past year has doubled year over year as many of Lego’s physical stores had to be temporarily closed. Customers have already been more interested in online shopping, but the coronavirus outbreak has accelerated trends and is unlikely to reverse.

“I’m not sure it will go back,” said Christiansen.

A unique gaming experience that combines the open creative play of LEGO toys for children with an augmented reality app.

LEGO

According to Christiansen, Lego is stepping up recruiting for its digital and tech teams. Ultimately, the company wants to be able to develop products faster and create platforms for Lego content and integrated play.

Still, traditional stores remain an integral part of branding strategy. In the past few years, the toy maker has made a foray into the Chinese market, opening dozens of physical locations.

While Lego was part of the culture in other regions like the UK and the US, parents in China didn’t grow up with the iconic colored blocks. It has been a boon for sales to have places where kids can get their hands on the bricks and see the sets that can be built.

“Children can see what Lego is and play with it,” said Christiansen. “It’s a brand built on the physical.”

In 2020, Lego opened 134 retail locations, 91 of them in China. The company currently has 678 branded Lego stores worldwide and plans to add an additional 120, including 80 in China. The goal is to have around 300 Lego stores in China by the end of 2021.

China is already one of the company’s top markets, posting double-digit growth over the past year.

Christiansen noted that maintaining the strong growth of 2020 will not be easy, but that the company is well positioned to continue to be a dominant force in the global toy industry.

“I wouldn’t bet 21% again, but I think if we continue our long-term investments I think we have a chance to outperform the market and take some shares,” said Christiansen.

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