Lego reports sales jump after Covid crisis kept families at home

Lego has received a lockdown boost to sales after families around the world were forced to spend more time at home during the coronavirus pandemic.

Total sales rose by 14% in the first half of 2020 and sales were up by more than 10% in its largest markets – including the Americas, western Europe, Asia Pacific and China – despite the closure of toy shops for months in some countries, including the UK.

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Lego, which is the world’s largest toy company ahead of the Barbie manufacturer, Mattel, and the Transformers owner, Hasbro, has spent heavily on direct-to-consumer sales, which are generally more profitable and have also proven resilient when families were locked at home.

Visitors to Lego’s website doubled year on year during the first half of 2020.

Revenue for the January to June period grew 7% to 15.7bn Danish kroner (£1.9bn) compared with the first half of 2019. Operating profit was 3.9bn kroner, an increase of 11% year on year. The most successful products included themed playsets from Harry Potter, Disney princesses and Star Wars.

Lego was established in 1932 in the small Danish town of Billund and has grown to become one of the most powerful brands in the world, including a successful film franchise. In 2016, Lego sold 75bn bricks, adding to the hundreds of billions of bricks already in existence.

The rise in profits in the first half of 2020 came despite the continued infrastructure spending and increased shipping costs after the governments of China and Mexico mandated the temporary closure of factories as the coronavirus spread.

Lego’s chief executive, Niels Christiansen, said the company had benefited from its longer-term pivot towards online shopping and added that the coronavirus lockdowns had resulted in more families playing together.

“Our strong portfolio appealed to builders of all ages and our recently upgraded e-commerce platform and agile global supply chain allowed us to fulfil online demand,” he said. “More families are playing and learning together with Lego bricks and we are seeing more adults than ever before enjoying building our more challenging sets.”

Beyond the pandemic, Lego faces a particular challenge around sustainability. The vast majority of its products are made from difficult-to-recycle polyethylene plastic. However, the company argues that the durability and backwards-compatibility of its pieces mean they can be reused repeatedly and it last month joined the Ellen MacArthur Foundation, which is focused on promoting a circular economy and fighting plastic waste.

In 2018, Lego said it would produce its first plant-based plastic, sourced from sugar cane.

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