The LEGO Group posts growing sales but declining profit

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The LEGO Group has published its financial results for the first half of 2019, confirming that sales have risen by 5% when compared with the same period last year.

Revenue has also improved by 4% but operating profit has declined by 16%. This can be primarily attributed to increased investment in projects which intend to secure long-term growth.

You can read further highlights and comments from Niels B. Christiansen after the break...

  • Global consumer sales grew by 5% in the six months to June 2019.
  • Revenue has increased by 4% in the six months to June 2019.
  • Operating profit was DKK 3.5 billion, a decline of 16%.
  • This is because of increased investment in initiatives which are designed to ensure long-term growth.
  • Consumer sales in Western Europe and the Americas grew in single digits while China enjoyed continuing double-digit growth.
  • Best selling themes include City, Technic, Creator, Friends and Star Wars.
  • Marvel's Avengers is also described as performing well and The LEGO Movie 2 contributed to consumer sales growth.

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.

“We are pleased with the performance of our evergreen favourites such as LEGO City and LEGO Technic. 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 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 in Mumbai in early 2020 from where the 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 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 digitalisation 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."


What is your opinion of these results? Let us know in the comments.

51 comments on this article

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By in United Kingdom,

I would like to know what innovative means when applied to ecommerce platform. The main thing an online shop should do is allow customers to select products and then checkout to complete an order. One where customers cannot checkout is certainly innovative, but not very customer friendly. But that is what we have right now for some customers.

Similarly, a webstore that allows customers to place orders only for them to be cancelled as the buyer has bought too many of that item in the past is not good. LEGO has past order data, so if they are going to cancel orders after they have been placed why not use that data to stop customers placing the order in the first place?

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By in United Kingdom,

“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.

This really could have been worded better. What is he actually saying? Poor / lower class families do not value the benefits of learning though play? We want to sell to the middle classes that can afford our product. We don't value all kids as kids, just the middle class ones.

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By in Belgium,

Duplo has slipped from the best-selling themes. I wonder what went wrong, my kids love it.

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By in United Kingdom,

@CCC Indeed poor wording, although I get the gist of what they are trying to say; middle class Indian families see the value and can afford Lego so it's logical to target that market. Sadly this implies that either lower class families don't care for such learning or that Lego don't care because they can't afford their products. So too would an actual functioning website be appreciated! There are only so many times I will return to a company and put up with negative consumer experience before I go elsewhere e.g. I waited until I was near a Smyths (which are not in my local area) to get some sets recently rather than risking crushed boxes from Amazon which would have been a simple click away. I've even gone to Argos a couple of times and they rarely discount Lego. I think maybe Lego should take heed of the Roman Empire; don't try and expand too much on shaky foundations! I would hate to see it all come crashing down.

I also think it's interesting that the Lego Movie 2 gets a mention as contributing to sales growth; those sets seem to have been on discount from day 1 and the movie seemed to get a lukewarm reception. Unless Lego priced the sets for immediate discount so they would appear a good deal, but then that doesn't really make a product look good.

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By in Netherlands,

Somebody at LEGO believes that Friends should be replaced by Castle..

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By in Canada,

Going to miss Powerpuff and Unikitty themes. Be nice if the small sets got just a bit more appealing.

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By in Netherlands,

I'm glad they finally expand in the Netherlands by opening not one but 2 Lego Brand Stores, this year. One in Utrecht and one in Amsterdam.

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By in United Kingdom,

@Backtobricks. Yes. I woldn't have said anything if they had made the statement "The growing middle class and the growing economy make India a logical next step in our worldwide expansion". It is then a clear business statement - India has a growing number of families that can afford our product, so it makes sense for us to expand there.

It is linking it to education, and then implying that poor families do not value education (whether through play or not) that is rather distasteful.

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By in Hungary,

Why is a castle the symbol for Friends?

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By in United States,

interesting... a worthy investment on there part?

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By in United Kingdom,

@CCC good morning we live in the real world where knock off brands exist to serve the needs of the poor...and ill-funded schools (plenty of those outside of India as well...) cannot seem to afford Lego SPIKE / BOOST etc.

Overall, the Kristiansens take a couple of big risks here, fingers crossed it pays off - otherwise we might need to stash up. All the best to TLG.

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By in Ireland,

If the recent changes to the VIP programme and the Online shop are anything to go, The main concern of LEGO is profit and not ‘investing for the future’.

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By in United States,

No mention of the "revamped" VIP system and how that platform will evolve over the coming months/years. Personally I feel like that was a giant step backwards, especially at a time when Lego are trying to grow the brand...

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By in Australia,

"The Group is investing in upgrading its ecommerce platforms to improve the user experience for consumers and its service to retail partners."

HAHAHAHAHA

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By in Canada,

Happy to see Avengers as one of the top selling themes! Hopefully they’ll start putting a bit more effort into Marvel sets now. I am quite surprised that Harry Potter didn’t break into the top 6 though...

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By in United States,

So with Marvel being one of its best preforming themes, do you think they will put more money into it and give us better sets and minifgures? Please, please?

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By in Netherlands,

LEGO Friends using a castle icon?

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By in United States,

When are Lego and Nintendo going to wake up and realize that a partnership would be a match made in heaven? Both are trying to make work what the other does best (Labo, Hidden Side, etc.) Both companies have similar values it's weird that they don't take advantage of the large market potential.

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By in United States,

It's not every day that you see the word "awesomeness" in a financial report. :)

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By in United States,

To those mocking the comments regarding investment in ecommerce: we've likely not seen the results of those investments. It seems they've acknowledged the shortcomings...give them a chance to improve it.

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By in United States,

I'm sure that the Disney IP licensing just keeps getting more and more expensive, considering it's for Disney, Star Wars, and Marvel now, and the films keep doing gangbuster business. I imagine they'll get a slight reprieve next year without a tentpole SW film and only two Marvel films (one an unproven IP at this point, the other an Avengers spin-off), but still, it's still going to be a very large number.

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By in United States,

I like all the changes LEGO has made and yet still the website isn't functioning. I love websites where you can't actually use a credit card to place an order.

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By in Puerto Rico,

After the acquisition of Merlin and more investments it is no wonder but those are investments for the future now, more politicians should read these types of reports to understand that profit and revenue is not the same.

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By in United States,

>Ninjago not listed as one of the best selling themes
[visible concern]

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By in United States,

@David1985 I feel your pain. It seems I can't do anything on the shopping website without some sort of error occurring.

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By in Singapore,

but that still doesn't fully explain why sales have gone up but operating profits are down so significantly. Investments are very much part and parcel of conglomerates, so that alone cannot contribute to a double digit decline in operating profits. Recently, TLM2 sets are selling at half price here. Do substantial discounts for unpopular themes contribute to lower operating profits?

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By in United States,

I don't know why they are pushing Hidden Side. I mean, the sets are cool, but the app they keep promoting isn't that great, it was pretty boring when it tried it.

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By in Canada,

I honestly haven't had to many difficulties with online shopping but I do mostly shop in store. However it seems the online experience for many is less than satisfactory. I suppose the website is designed mostly with children and families in mind but I have never loved the design of the shopping site. For a company that has such large profits margins you would think they could spend a few dollars on getting it right.

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By in United States,

It took 15-20 min.'s and 2 failed attempts to place my [email protected] order yesterday. I was on hold w/customer service when the 3rd attempt finally went through. Any improvement on that experience is welcome!

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By in Italy,

TLG haven't been missing a shot in the last 15 years or so. Congratulations to them.

However: yes, I agree with others in pointing out poor attention to developing their website, which - if done - would ultimately help them to improve sales and be appreciated worldwide.

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By in United States,

Wow...I think this might be the first report in a while where Ninjago was not mentioned in the report.

However, LEGO is still the amazing company despite the setbacks it has faced. Here's to many more years of LEGO dominance!

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By in United States,

Its seems Harry Potter is not the best theme sales wise

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By in United States,

Ninjago is mentioned as top selling in the article that is linked in the first sentence.

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By in Canada,

Tried to buy a set this weekend.
Took twice as long as it used to.
And, I had no confidence that they got the order right including promo items.

That's NOT my definition of successful eCommerce investing.

But other than that, I am happy to see TLC financially healthy and growing.

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By in United Kingdom,

@CCC I agree about the e-commerce platform. I’m trying to place a bricks and pieces order only for it to be stuck in the checkout box. Every time I try to pay I get an error. I called customer services and they knew of the problem and could 8 give a list over the phone. Having just taken over a hour to key it all in and then not be able to call it up, I said this was not practical. Still no feedback on when it will be fixed. It’s as if they don’t want to take customers money.

Also found that the new VIP page does not work on safari ( iPad). Got told to use a different browser to see my account.

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By in United States,

-The Harry Potter and Jurassic World stuff is evidently not selling very well. Given that each theme had a large D2C set, that's surprising. In contrast, the Disney IPs- Marvel and Star Wars- are selling very well. The Marvel sets are very kid-focused.

-Somewhat surprisingly, the Lego Movie 2 sets are not depicted as top sellers. They didn't make an interim report for the movie at all. I'm not surprised by this: I felt the concepts were too ambitious compared to the first film. Frankly speaking, the sets are too pink: there are about 12 sets in the Lego Movie 2 line using the "Friends" colors and aesthetic relative to 2 for the 2014 Lego Movie 1 line. I don't think this aesthetic resonates with the Chinese market, which is rapidly buying more Lego.

-Ninjago is mentioned as a top selling theme, but yet it's omitted from the infographic. Perhaps it is the seventh highest selling theme?

-Why does a privately owned company post their financials, anyway? Does Danish law require them to do so?

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By in Portugal,

Declining profit? Try to listen to the fans and what they would like to buy! Lego is all about experience, not licenses! Don't get me wrong, TLG is one of the few brands in the world that won't struggle ever for costumers/sales, they just have to pay more attention to us lol

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By in United States,

@jlskywalker: agreed. I've started buying non-license items from LEGO directly, and if I want a licensed item, I'll buy it elsewhere.

I feel like the licensed content is limiting what other themes could be revealed, or make a comeback, since the contracts would probably indicate that they can't make things that look similar to what their IP has, to force the IP purchase. (ie Happy Potter preventing castle-esque stuff, Star Wars preventing Classic Space comeback, and similar situations)

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By in United States,

Harry Potter isn't preventing Castle from return, LEGO thinking classic Castle will not sell well is why it never came back.

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By in Australia,

I had no problems placing a Shop @ Home order on Sunday although it hasn't actually shipped yet :(
Bricks & Pieces being out of action on the other hand sucks, I have a fairly large order I want to make but with the site down, a chunk of that order may well go to Bricklink instead.

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By in United States,

For all the reasons us "FANS" put on why we "THINK" The LEGO Group isn't bringing back one theme is all and good. How come TLG doesn't just come out and tell us WHY they don't bring back Castle, Space, City Farming, Individual Train cars, or any other worthwhile themes?

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By in Netherlands,

I think the coming years will be interesting.
I don't know about the US, but over here, ever more alternative brick manufacturers come to market and are gaining quickly in exposure as well as popularity. Names like Cobi, CaDa and Xingbao immediately come to mind and start to show up even in brick and mortar stores. Even MegaConstrux is making a comeback via their deal with Amazon. And speciality companies like BlueBrixx, who cater specifically for the German AFOL market with their awesome train, buildings, military and architecture sets are also on the rise. Sure, none of them has as prominent a name and marketshare as LEGO at the moment, but the wind of change is beginning to become noticeable.
At the same time we have ever more lacklustre and or overpriced sets from LEGO, especially in themes that used to be very popular in Germany, like Technic or even Duplo. Things are not looking too great for TLG over here in this day and age.

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By in United States,

@AustinPowers Megablocks have been Lego's biggest competitor in the USA and still are. They've coexisted for a long time. I think too many people are overlooking the fact that revenue and sales are both up, which means they're still selling well. That profit is down just indicates they had too many expenses this year. This is actually a great report. Since they're a private company the only ones who will care about a decline in profits will be the private owners. But remember, a decline in profits doesn't mean they lost money. It means their profits were less than last year's, but the profit was still huge!

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By in Australia,

I presume TLG are going through some sort of R&D phase, hopefully that's going to include some new product ranges as well as the redesign of websites and market expansion.

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By in United Kingdom,

Just read a BBC News article that states TLG are planning 16 new brand stores in the UK over the next year. I know Southampton and Birmingham are about to get brand stores, but where are the other 14 planned for? Does anyone know?

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By in Norway,

Regarding LEGO and Nintendo: Nintendo chose to partner with K’Nex for their construction toys, so I can’t imagine a relationship with LEGO/Nintendo happening, unless Nintendo wakes up and realizes that they’d do much better with LEGO. The day that happens is the day my wallet goes dry.

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By in Netherlands,

Since some people mentioned this problem here as well, I was finally able to finalise a Bricks and Pieces order just a minute ago... after a few frrustrating weeks of trying ;-)

edit: I could finish an order already in my cart, but I now have seen B&P has been disabled... so it's a bit of wait and see now

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By in United States,

Declining Profit is not really the correct term based on the report. Profit is actually up, but they seem to be increasing re-investment and development. It's pretty obvious that what they are seeking with regard to e-commerce is a better solution. We all know the pitfalls of Shop.lego.com. With the ever shrinking retail shelf space they need to put up a better more bulletproof e-commerce solution. There is nothing deeply worrying in that report. And it lines up with a few things I have noticed. A number of Mall Lego stores seem to be undergoing massive renovation and enlargement. I think their biggest pitfall right now is having a better more direct path to more consumers.

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By in Serbia,

"BlueBrixx, who cater specifically for the German AFOL market with their awesome train, buildings, military and architecture sets"

I just looked at BlueBrixx and the top models I'm seeing are WW2 German military vehicles. I thought Germany was doing its best to be ashamed of its role in WW2, if sets of German panzers are catering to German AFOLs, I would question whether I would want those people to be in the same community with me.

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By in United States,

A castle icon for Friends? So is the next step in the Friends franchise to visit the theatre with medieval play acting, or will they actually have a group set in medieval times (I'm sure people in those days had friends too).

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