Sales of Danish toy production company Lego rose 14% in the first half of the year as families tend to spend more time at home due to the coronavirus lockdowns, said by the giant toymaker on Wednesday.
The family-owned company came back to growth since 2017, when double-digit sales for a decade came to an abrupt halt. According to Lego’s CEO Niels Christiansen, e-commerce investments are crucial factors when retail stores were shut down during the pandemic.
Lego has managed to improve the overall toy market expansion, which resulted in a positive trend that continued from January to June. Best known for its vivid-colored plastic bricks, Lego is in line to compete for market share with American-Canadian toy company Hasbro and American multinational toy manufacturing company Mattel, known for making Barbies.
The momentum was still there in the second half of the year, even after people started going back to school and work, CEO Christiansen said. He concluded that the rise in sales was not just a reflection of the two-month lockdowns when everyone stayed home.
Last year, Lego invested primarily on e-commerce and its brand website, which resulted in a doubling of visitors up to 100 million in the first half of 2020.
While Lego’s consumer sales went up by 14% in the first six months of the year, revenue surged by only 7% to 15.7 billion Danish crowns ($2.5 billion). The difference between consumer sales and income can be attributed to retailers drawing on existing inventory to achieve demand.
The Danish toy company was forced to cease production in China and Mexico temporarily. However, the company was still able to compensate for the 616 shops worldwide that were close due to the pandemic by acquiring increased sales online. Today, almost all their shops have reopened and are back to regular operations. According to Lego, their operating profit also grew by 11% to 3.9 billion Danish crowns.
Other than Lego, game maker companies have been on a tear as the COVID-19 social distancing restriction left many people to stay in their homes and find new ways to pass the time.
Japanese multinational electronics and video game company Nintendo’s operating profit went up 428% in the recent quarter as the “Animal Crossing” game and the Switch console drives more sales. The company’s share surged up by 35% this year.
On the other hand, toy giants like Hasbro and Mattel have struggled this year. They have cited distribution issues and manufacturing problems tied to the pandemic as significant challenges in their most recent quarters.
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