Lego doubles profits as demand soars beyond Covid-19 lockdown
Brick brand says it does not not expect problems with Christmas stock despite global supply crisis
Last modified on Tue 28 Sep 2021 08.02 EDT
Lego profits more than doubled in the first six months of the year as brick fans stayed home to build Star Wars and Harry Potter models even after the Covid-19 lockdown ended.
The Danish toymaker was one of the winners from Covid restrictions as children and adults turned to its model kits to occupy themselves – and that trend has continued. Sales jumped 43% to DKr23bn (£2.6bn) in the first six months of 2021 while net profits surged 140% to DKr6.3bn.
There have been warnings of a reduced choice of toys as well as higher prices this Christmas due to the widespread disruption to the flow of goods around the world owing to labour shortages and higher transport costs, but Niels Christiansen, the Lego chief executive, said he did not foresee any problems.
“We don’t expect any particular issues but we are of course, as is everybody, dependent on transportation and customs into the UK but as it looks right now we don’t have any particular concerns,” he said.
UK retailers including John Lewis and toy specialist The Entertainer are among the companies to say they are chartering ships to make sure Christmas stock arrives on time. The Entertainer is bringing 70 containers from China on a charter boat but is having to pay $19,000 (£13,962) to transport each compared with a pre-Covid rate of $1,500.
Christiansen said the company did not plan to make any “extraordinary” price rises to mitigate the impact of higher freight and raw material costs. He added that the strong financial performance would lead it to speed up investment in environmental initiatives. It recently unveiled its first bricks made from recycled plastic bottles and, after a successful trial, said paper bags would replace single-use plastic in boxes in 2022.
Lego highlighted the success of its tie-up with the games company Nintendo with the sets devoted to its famous mustachioed plumber Super Mario which it said had helped it combine physical and digital play. Star Wars and Harry Potter were also popular, as were Creator models. The latter appeal to adults as they are more difficult and require more pocket money – the range includes a £450 model of the Colosseum.
The privately owned company said sales were up by more than 10% in all markets with web sales up 50%. Christiansen attributed the success to a wide product range that appealed to all ages and interests. The figures were helped by the ability of Lego’s factories to operate normally again and the reopening of stores.
Christiansen anticipated the strong run would continue for the rest of the year but suggested the stellar growth would “stabilise to more sustainable levels” as people return to pre-pandemic spending patterns.
“This trend, combined with our plans to accelerate reinvestments into the future of the business, is expected to result in more normalised profit levels moving forward,” he added.
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