Lego recorded its strongest growth rates in five years as sets that blend physical bricks with digital Super Mario games propelled the Danish toy company to record sales and profits in 2020.
The world’s largest toymaker increased revenues by 13 per cent to DKr43.7bn ($7bn) in full-year results while operating profit jumped 19 per cent to DKr12.9bn.
The growth was well ahead of the privately held company’s two main listed rivals, Hasbro and Mattel of the US, and better than the broader toy market as Lego’s investments in boosting its online sales and broadening its product range paid off.
“I’m very keen that five or 10 years out we stay relevant,” said chief executive Niels Christiansen. “We need to do whatever it takes to stay relevant. Digitally, we start to find a formula that works, and I think we can do a lot more of this.”
Lego has rebounded since a brush with financial collapse in 2003, taking its garishly-coloured plastic bricks to China and the US and expanding its tie-ups with brands spanning Harry Potter and Adidas. But it suffered a wobble in 2017 as sales and profits fell for the first time in more than a decade due to weak products and operational problems, leading to the appointment of Christiansen as chief executive.
He first steadied the ship before investing heavily in Lego’s digital capabilities and its own-brand stores after the bankruptcy of several big chains such as Toys R Us. While it posted record sales last year as well, 2020 marks the first year it has exceeded its profit level from the previous peak of 2016.
“I’m optimistic that we can grow in 2021, not by 21 per cent [the amount consumer sales increased by in 2020] but we can still take market share. We can sustain that,” Christiansen said.
Lego has just launched its latest mash-up of the physical and digital via a partnership with Universal Music that allows children to use augmented reality to make music videos for popular songs.
Christiansen said Lego was determined to guard against complacency. Asked about how it would avoid the mistakes that led to its problems in 2017, he replied: “It’s always a danger. I can’t say it will not happen. But the best insurance against it is to make sure we keep investing for the long term behind the products, the brand and digital.”
He added that Lego was hiring hundreds of new employees to work on digital projects, helping the digitalisation of the company and its products. He insisted the physical brick would remain at the heart of the company but there were opportunities to broaden its product portfolio and increase the links between its different apps and digital experiences.