Analysis: LEGO sales grow at slower rate amid price increases and heavily-discounted sets

The

Group’s sales grew at a comparatively slower rate in 2022, amid a wave of price increases and sets that have seemingly faltered out of the gate.

In the same year the company celebrated its 90th anniversary with flagship retro releases like

and – both warmly received by fans – it also increased prices across a huge chunk of its portfolio, citing ‘increased raw material and operating costs’.

Towards the end of 2022, it also launched three products that have seemingly already proven to be shelf-warmers, by dint of their immediate discounts at

: , and . Yet despite those potential misfires, and the optics of increasing prices of on-shelf products, sales still grew by 12% in 2022.

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On the surface, that seems like good news, so it’s no wonder the

Group is busy patting itself on the back in its latest financial results report. The figure is still ahead of the global toy industry, and comes while rival collectible and toy companies like Funko and Mattel are struggling with excess inventory and increased costs.

But compared to years immediately previous, it’s a slightly slower rate of growth than some may have expected – especially in the year of the company’s 90th anniversary. In 2020, sales skyrocketed by 21%, driven by the pandemic forcing people to find ways to spend time indoors; in 2021, sales grew by a further 22%. By contrast, 12% feels like a significant tail-off.

There’s more to consider, though: like the fact the world has almost returned to normal, and the pandemic-prompted boom seen across many industries has started to settle down. The more interesting question now is how the

Group will navigate a potential readjustment of the market, avoiding the mistakes of companies like Funko.

The manufacturer behind the Pop! vinyl figures accelerated production during the pandemic, but has now found itself with $30 million of products it can’t shift – and is instead choosing to send to landfill. It’s hard to know whether the

Group has suffered the same inventory problems at any stage in the past 12 months, but it should have better ways of dealing with them anyway: repurposing elements for different products, for example.

Nevertheless, the

Group has already started expanding three of its factories to increase production capacity, while breaking ground on a new factory in Vietnam in 2022. It’s also announced plans for another new carbon-neutral factory in the US, in order to meet ‘future demand from the Americas’, according to the latest financial results.

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The company is therefore clearly banking on sustaining a good level of growth for the foreseeable future, even if it’s once again setting modest expectations of single-digit revenue increases in 2023. That prediction may also take into account the comparative dip between 2021 and 2022, however – and the full impact of the

Group’s price increases, which were only implemented in August and September.

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It’s worth highlighting too that while three flagship releases in the final quarter of 2022 may not have performed as hoped, the

Group launched hundreds of last year – most of which have been top-notch. And 2023 is already off to a strong start with widely-celebrated models like , and seemingly successful sellers like , which sold out almost instantly in the US after launch.

This year’s results should be an even better indication of whether the

Group has managed to successfully gauge the correct level of demand, and in particular whether its investments in new factories and stores – which contributed to a 28% drop in free cash flow in 2022 – will continue to pay off.

For now, click here for more on the

Group’s financial results for 2022, or head here to find out its five top-selling themes last year.

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