An interesting piece of news that was released last week is the LEGO Group’s 2019 half-year financial report. As LEGO is a privately owned company, they are not obliged to release their financial reports publicly, but LEGO does it anyway, and it’s always an educational and interesting read. The summary of the financial report states that “revenue and consumer sales grew while significant investments were made in initiatives which will bring learning through play experiences to even more children around the world.” Below are the performance highlights, and the full press-release.
2019 LEGO GROUP PERFORMANCE HIGHLIGHTS
- Global consumer sales grew 5 percent compared with the same period in 2018.
- Revenue for the first half grew 4 percent to DKK 14.8 billion. In constant currency, revenue grew 2 percent compared with the same period in 2018.
- Operating profit was DKK 3.5 billion, a decline of 16 percent. Net profit was DKK 2.7 billion, a decline of 12 percent driven by significant investments in long-term growth.
2019 LEGO FINANCIAL REPORT PRESS-RELEASE
BILLUND, September 3, 2019 – The LEGO Group today released its financial results for the first half of 2019 to June. Revenue for the period grew 4 percent to DKK 14.8 billion compared with the same period last year. Consumer sales grew 5 percent compared with the first half of 2018 and the brand grew market share in its largest markets.
Operating profit was a solid DKK 3.5 billion. This was a decline of 16 percent compared with the first half of 2018 due to the decision to step up investments in initiatives designed to create growth in the long term.
The LEGO Group CEO Niels B. Christiansen said: “We are satisfied with our performance given the transformative shifts which continue to reshape the global toy industry. Against this backdrop, we continue to grow consumer sales and market share in our largest markets. This is thanks to our dedicated colleagues who are laser focused on collaborating with our valued retail partners and creating the very best brand experiences for fans of all ages. At the same time we’re making upfront investments to create a strong foundation from which to grow in the long term and inspire future generations. This includes opening new markets, expanding in China, creating innovative retail experiences and developing exciting new products and play experiences.”
Consumer sales in established markets such as the Americas and Western Europe grew single digits. China, a strategic growth market for the LEGO Group, continued its strong double-digit growth in consumer sales.
Top selling themes in the first half of the year were a mix of homegrown favorites and partner IPs. In no particular order, they were LEGO City, LEGO Creator, LEGO Friends, LEGO Ninjago, LEGO Technic, and LEGO Star Wars. LEGO Marvel Avengers sets performed especially strongly, and The LEGO Movie 2 products also contributed to consumer sales growth. “We are pleased with the performance of our evergreen favorites such as LEGO City and LEGO Technic,” said Christiansen. “We are also excited to explore innovative ways to bring the brick to life through digital play experiences such as new LEGO Hidden Side which blends the best of building with the awesomeness of augmented reality.”
Expanding In New Markets – The LEGO Group is stepping up investments to expand its global physical and digital footprint in order to reach more children around the world. The LEGO Group will continue to invest in China and is on track to have more than 140 stores in 35 cities by the end of 2019. It will also open an office Mumbai in early 2020 from where the LEGO Group will expand its presence in India. “We see an opportunity to reach more Indian children and families who value the benefits of learning through play. The growing middle class, importance of education and growing economy make India a logical next step in our efforts to reach many more children around the world,” said Christiansen.
Upgrading Ecommerce And Physical Retail Experiences – The LEGO Group is investing in upgrading its ecommerce platforms to improve the user experience for consumers and its service to retail partners. In addition, more than 70 stores carrying the LEGO brand will open outside of China during 2019, including a flagship store in Amsterdam in December 2019. It will be the brand’s fifth flagship store. Christiansen said: “We are making these investments from a sound financial base to capture the opportunities being created by mega-trends such as digitalization and global demographic and economic shifts which are reshaping the industry. Being ahead of these trends will allow us to inspire future generations of children.”
A Global Force For Learning Through Play – The LEGO Group’s ambition to bring learning through play to all children around the world remains its primary focus. Christiansen said: “Play is more important than ever. When children play, they learn skills that will be critical to their future success. The World Economic Forum estimates that 65% of kindergarten children today will have jobs that don’t yet exist. The only way children will succeed in this uncertain future is to have universal skills such as creativity, problem solving, resilience, and collaboration – skills developed from the earliest age through LEGO play. Ensuring children can achieve their potential is what drives everyone at the LEGO Group to do all we can to inspire and develop the builders of tomorrow – now, and for generations to come.”
There are lots of interesting details in this press-release worth discussing; the best performing LEGO themes, LEGO’s interest in combining physical and digital play, their focus on China and now India, opening new stores, and updating their online shop are just some of them. For a larger version of the infographic included at the beginning of the press-release (see above), visit the LEGO Newsroom website.
What do you think? What did you find the most interesting about this press-release? Feel free to share your thoughts and discuss in the comment section below!
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I was always curious why they didn’t expand into India. But then I never heard of an Indian afol before. Maybe they are not into creative building?
That’s a good question. I haven’t heard of any LUGs or displays, or conventions from India either. I wonder why. Asian builders were building even before Lego had stores in their areas. They had LUGs, building events, and posted stuff online. But I never heard anything from India. I wonder if this is a cultural thing? Anyone from India would like to share what kids in their country play with?
India is huge, and it’s quite diverse in its ethnic and class make-up. There are however expectations that India’s economy will grow considerably in the near future, so that’s probably what Lego has its hopes on. I guess they would primarily market themselves towards the Hindi- and English-speaking middle classes (which would also likely be more light-skinned than more Southern ethnic groups).
They say the Lego Movie 2 sets did well, but I see them on clearance sale all the time. I suppose they may perform differently in different parts of the world. I don’t think they were as good as the first Lego movie sets.
Well, that “upgrading eCommerce and physical retail experiences didn’t go that well, did it? Messing up the VIP program to the point that people can’t even use the website. I hope they reconsider.
Yep, they should just have left the vip program alone. It wasn’t the best in terms of discounts, but with the various freebies, it was okay. Now, the whole thing is a mess and very laborsome to use.
Yeah, I guess. Although I haven’t been to any official Lego store for a while.
I’ll likely move to an area closer to the Stockholm Lego Store this fall or winter, though. Then I might visit it some more. (Although I already have a lot of bricks now and generally wouldn’t buy a lot more than BAM minifigs, anyway…)
Keep in mind that Lego takes in the ” what if ” factor if and when they decide to make changes in the company or their sales. So, Lego is prepared to take a hit every once in awhile. Now, if Lego keeps losing money and losing profit then it would definitely affect them eventually. Right now they have some wiggle room to work with. I mean, Lego doesn’t want to lose money , but, it does happen.
They seem to be doing pretty good. There are so many markets they can expand to. More of Asia, India, Central and South America, South Africa, Australia. Most of these markets they have little or no presence right now.
Everything is awesome!