Global and major market share showed growth
After experiencing excellent results in 2021, Lego once again delivered a high-scoring answer. On September 28, LEGO released its financial report for the first half of the year ended June 30, 2022. In the first half of this year, LEGO's revenue reached 27 billion Danish kroner, an increase of 17% compared with the same period in 2021, and its net profit was 6.2 billion Danish kroner.
LEGO said that in the first half of 2022, strong revenue growth and cash flow enabled LEGO to accelerate strategic projects, reduce the impact of inflation in raw materials, energy and freight costs, while maintaining operating profits at 7.9 billion Danish kroner. Global and major market share are growing. Continued demand from a broad and diverse product portfolio is the main reason for the growth.
LEGO Group CEO Ni Zhiwei said, "Although there are still many uncertainties around the world, we still have higher retail sales and double-digit revenue growth, thanks to the demand for our strong product portfolio and our outstanding team execution ".
According to Lego's financial report over the years, from 2017 to 2020, Lego's revenue was 35 billion Danish kroner, 36.4 billion Danish kroner, 38.5 billion Danish kroner and 36.4 billion Danish kroner, respectively, achieving only a slight increase. However, in 2021, LEGO Group achieved rapid revenue growth to 55.3 billion Danish kroner with a year-on-year increase of 27%, and its revenue growth continued to 2022.
Ni Zhiwei said, "In the second half of 2022, we see that demand for our products remains strong. Over the longer term, we expect revenue to grow steadily at a more sustainable level. We will continue to reinvest our business and accelerate our projects in in the fields of product innovation, digitalization, production capacity, retail networks and sustainable development to maintain development momentum and achieve long-term sustainable growth. These major investments will put us in a good position in the future and bring more children around the world the opportunity to ‘learn and develop through fun’.
New brand retail stores Chinese market accounted for nearly 70% of
In the 1980s, Lego took the first step towards the Chinese market. Over the years, LEGO has continuously changed its strategic positioning, from holding scattered small events and constantly waiting and watching opportunities to gradually regarding China as an important market with a priority strategic position.
financial report shows that in the first half of this year, LEGO further expanded its global brand retail network and opened 66 new LEGO brand retail stores, of which 46 are located in China, which means that nearly 70% of brand retail stores are all in the Chinese market. Of the 833 stores around the world, 349 are located in China, accounting for about 40%.
Regarding the strategic planning of the second half of the year and the future in the long term in the Chinese market, a Beijing Business Daily reporter contacted Lego Group, but no reply was received as of press time. But before, LEGO revealed that it plans to open 80 new stores in the Chinese market this year. Lego's stride in the Chinese market also reflects consumers' favor for its products.
In June this year, LEGO revealed in an interview with Beijing Business Daily that due to the sharp rise in input prices, it will raise the prices of some products in the Chinese market on August 1. A Beijing Business Daily reporter found that after the news was announced, sales of LEGO physical stores and e-commerce platforms have increased. Now, nearly two months have passed since the official price increase, and the popularity of purchasing through official sales channels has remained unabated.
According to Lego Taobao flagship store , among all the products sold, there are 8 pieces with monthly sales exceeding 1000 pieces. Among them, the 42123 McLaren Senna GTR racing building blocks ranked first in the hot sales reached more than 3,000 pieces per month. In addition, there are many more people with monthly sales exceeding 100 pieces.
After seeing the popularity of Lego, in recent years, many brand products have emerged in the field of building blocks in the Chinese market, such as Goodie, Qixiu, Senbao, onebot, Bruco, etc., which have also won the favor of a group of consumers. Looking at the overall market share, LEGO still occupies the largest share in the Chinese market.
According to the "Analysis Report on the Brief Version of China Building Block Toy Industry" released by Huajing Industry Research Institute, Lego once showed the market awareness of "building blocks are Lego" based on its quality and marketing. Although there are currently independent building block toy companies such as Bangbao Education and Enlightenment in China, its market share is low and there is still a lot of room for development in market recognition.
Why does the money-absorbing power of "90-year-old" only increase but not decrease?
Since its first appearance, LEGO, who is 90 years old, has now reached the largest scale in history to expand its product line. Among the different series, the most popular themed series in the first half of this year include the LEGO Star Wars series, the LEGO Machinery Group, the LEGO Icons series, the LEGO City Group, the LEGO Harry Potter series and the LEGO Friends series.
"Lego's solid market recognition comes from its product quality and creative special design, and its leading layout in the field of building blocks has also further enhanced its brand awareness. On the other hand, Lego has once again become the eye-catching point for expanding its influence by cooperating with more well-known IPs and launching cross-border products. It not only stimulates the purchasing desire of its target consumer group with the help of joint brand, but also uses cooperative brands to discover new consumer groups." Li Jie, a researcher at the Digital Cultural and Creative Industry Think Tank, said.
surrounds the building blocks, Lego keeps pace. In the previous 2021 financial report, LEGO mentioned in its future plan that LEGO will continue to increase strategic investment in the fields of product innovation, retail channels, production capacity, digital transformation and sustainable development to help current and long-term development.
This plan was also promoted in the first half of 2022. According to the financial report, LEGO will further strengthen its own and partners' e-commerce capabilities. In June this year, LEGO Group officially opened a digital technology center in Copenhagen , and expanded the scale of the global digital team by nearly 40% in the first half of 2022. In addition, LEGO has strengthened e-commerce, upgraded digital infrastructure and promoted enterprise-wide digital transformation.
cultural and creative industry investor Zhao Chenyang believes that in the future, in addition to promoting the "education and entertainment" function of building blocks, Lego still needs to continuously strengthen its brand advantages and create the digital marketing model to further enhance its popularity.
Beijing Business Daily reporter Zheng Rui Han Xinyuan
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