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Has the LEGO Group found cause for optimism?

Analysts predict that the toy construction market, dominated by the LEGO Group, will be back on track in 2017 after a disappointing 2016.

Flat US sales in 2016 led to a number of business articles focussing on damage limitation and how CEO Bali Padda might make changes to improve the company’s outlook. Toy News reports that the research analysts Euromonitor expect the construction category to return to previous levels of success when the 2017 figures are in, with the explanation particularly interesting.

Euromonitor’s toys and games analyst, Matthew Hudak has suggested that the reason for drop has stemmed from two conditions.

“2015 set a very high LEGO Star Wars bar due to Force awakens. Rogue One, while popular, couldn’t drive LEGO Star Wars demand in the same way.

“The other issue is that LEGO Dimensions had a full year of sales in 2016, that likely created some extra competition to construction toy LEGO sales.”

If the retail expert is correct, then the expansion of the LEGO brand beyond construction is reaching the point at which one section finds itself competing with another, something that is perhaps inevitable of the LEGO Group is determined to expand into different categories.

“In 2017 and on to 2021, we expect the category to regain momentum off of LEGO, which will have numerous films in its new LEGO movie franchise to drive demand,” continued Hudak.

“In addition, LEGO Star Wars is typically one of the company’s most popular products, and we expect Star Wars Episodes 8 and 9 to help further drive toy sales.”

Whether the boost will be enough to hear more positive noises from the LEGO Group remains to be seen and will largely depend on whether the upswing is felt in the US market.

LEGO SYSTEM A/S

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