The LEGO Group achieves top and bottom line growth during 2019
Posted by CapnRex101,
The LEGO Group has published its financial results for 2019, showing that global consumer sales, revenue and net profit all grew during this period.
These results are despite substantial investment in longer-term growth, contrasting with LEGO's results for the first half of 2019.
You can read further highlights and comments from Niels B. Christiansen after the break...
Headlines
- Global consumer sales grew 5.6% in 2019 compared with 2018.
- Revenue has increased by 6% to DKK 38.5 billion.
- Operating profit rose to DKK 10.8 billion, rising by 1%, while net profit reached DKK 8.3 billion so increased by 3%.
- These increases were achieved despite significant investment in long-term goals.
- Best selling themes include City, Creator, Classic, Friends, Star Wars and Technic.
- Other themes which performed well include Harry Potter, Marvel and Disney.
- Visitors to LEGO.com increased by 27%.
2019 performance highlights
- Global consumer sales grew 5.6 percent in 2019 compared with 2018.
- Revenue for the full year grew 6 percent to DKK 38.5 billion.
- Operating profit grew 1 percent to DKK 10.8 billion. Net profit was DKK 8.3 billion, an increase of 3 percent despite significant investments in long-term growth initiatives.
- Cash flow from operating activities is a strong DKK 9.6 billion.
- Market share grew in all major markets.
BILLUND, March 4, 2020: The LEGO Group today reported earnings for the full year ending December 2019. Revenue for the period grew 6 percent to DKK 38.5 billion compared with 2018. Consumer sales grew 5.6 percent compared with 2018 and overall global market share increased.
Operating profit was DKK 10.8 billion, an increase of 1 percent compared with 2018, while net profit grew 3 percent to DKK 8.3 billion. This growth was achieved alongside the Group’s bold investments in a range of initiatives designed to deliver growth in the long term.
The LEGO Group CEO, Niels B Christiansen said: “We are very pleased with this result and I would like to thank our dedicated colleagues for their amazing contribution. It was a strong year where we outperformed the toy industry and grew consumer sales and market share in all our largest markets. We also expanded our presence in newer markets which helped us achieve our ambition of introducing learning through LEGO play to many children for the first time.
“Our industry, like many others, is being redrawn by digitalisation and global socio-economic shifts. We’re leveraging our strong financial foundation to invest in initiatives that will allow us to keep ahead of these trends and enable growth in the long term. This includes innovating play, innovating our retail ecosystem and investing in new market entries so that we are well positioned to inspire young builders for generations to come.”
The Group grew consumer sales in all market groups. The Americas and Western Europe grew single digits, while China grew strong double-digits.
Innovating the portfolio
Top selling themes in no particular order were LEGO City, LEGO Creator, LEGO Friends, LEGO Technic, LEGO Classic and LEGO Star Wars. The LEGO Harry Potter, LEGO Super Heroes (Marvel Avengers) and LEGO Disney Princess themes also performed strongly.
Christiansen said: “We are very pleased with the popularity of our core products such as LEGO City and LEGO Creator, which, like all our products, provide children with endless possibilities to build and rebuild. We are also satisfied with the performance of our IP sets and our new theme LEGO Hidden Side which seamlessly blends building and augmented reality.”
Engaging new consumers & adult fans
In 2019, the Group also launched its first integrated global brand advertising campaign in more than 30 years, Rebuild the World, which attracted new consumers to the brand.
It also acquired BrickLink, the world’s largest digital platform for adult fans of LEGO building. The platform boasts more than one million members and features a marketplace, design software and a community where fans can share their latest builds.
Innovating retail
The Group expanded its global retail ecosystem opening 150 LEGO branded stores; upgrading its e-commerce site; and strengthening its collaboration with retail partners. It now has 570 stores around the world, with plans to open approximately 150 more in 2020, the majority in mainland China. Visitors to the company’s revamped LEGO.com e-commerce site increased by 27% in 2019 and positive progress with retail partners contributed to consumer sales growth.
Christiansen said: “The retail environment is constantly changing. Consumers are looking for immersive brand experiences instore, and value and convenience online. We are stepping up investment in all our retail channels and working closely with our partners to connect with people wherever and however they want to shop.”
Geographic expansion
China remains a strategic growth market for the LEGO Group. In 2019 it expanded its presence in tier three and four cities and now has 140 retail stores in 35 cities, including flagship stores in Beijing and Shanghai. During 2020, the Group plans to open an additional 80 stores in around 20 new cities. It also developed its e-commerce presence on partner platforms and recently renewed its partnership with Tencent as part of plans to engage consumers and shoppers through unique digital experiences.
Stepping up investment in sustainability
In 2019, the LEGO Group continued its efforts to create a positive impact on society and the planet. Through its local community engagement programmes, partnerships and outreach programmes it provided learning through play experiences to more than 1.8 million children across 26 countries. It continued to balance 100% of its energy use through renewable sources via investments in solar and wind power and launched Replay, a trial programme to encourage the circular use of LEGO bricks.
In 2020 and beyond, the Group will significantly step up investments in sustainability initiatives focussed on children and the environment. It will implement programmes in its local communities to bring learning through play to millions more children. Many of these initiatives will use play to inspire children about sustainability. It also will make products and packaging more sustainable and by 2025 will use only sustainable packaging, including phasing out single-use plastic packaging.
Christiansen said: “It’s more urgent and important than ever that we all help children shape a sustainable future. For more than 80 years we’ve seen how play can help children develop the skills to solve the most complex problems and build bright futures. We know play is a powerful force so we will step up investments in learning through play projects to help children understand and explore ways to tackle sustainability issues now and in the future.”
Changes in the chairmanship of LEGO A/S
Following the strong results, the owner family of LEGO A/S today announced changes to the Board of Directors. Thomas Kirk Kristiansen will assume the role of Chairman of the Board of Directors, Søren Thorup Sørensen, CEO of KIRKBI A/S, will become Vice Chairman. Jørgen Vig Knudstorp will remain a member of the Board. Thomas Kirk Kristiansen and Jørgen Vig Knudstorp will continue their joint long-term strategic development of the brand in the LEGO Brand Group – a chairman’s office within KIRKBI.
What is your reaction to these results? Let us know in the comments.
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59 comments on this article
Really interesting read.
It's kind of funny how all I hear are complaints about the most recent waves of Marvel sets/minifigures but it's still a best-selling theme, clearly LEGO are doing something right there.
Also long live Friends, we've had so many great parts and colours because of that theme and I'm glad that, presumably if it's selling well, we'll get more.
Well, last years wave of Marvel sets were best selling. Granted they felt kinda meh too, but I'm sure there was a huge upsurge following End Game. Looks like Ninjago didn't make the cut; the theme has been a bit more toned down recently. Honestly the one that seems strangest to me is Classic, but there must be a demand.
Imagine how much more it would be if they brought back Pirates and Castle! ;)
@xccj said:
"Well, last years wave of Marvel sets were best selling. Granted they felt kinda meh too, but I'm sure there was a huge upsurge following End Game."
True, but I was counting those when I said recent. The last wave that people seemed to agree with actually great was Infinity War (or at least that's what it seems like to me, from reading around the web), but if kids are enjoying them then that's what matters. Great printing and builds in this theme is a bonus and I'm content with that.
@darthnorman said:
"Imagine how much more it would be if they brought back Pirates and Castle! ;)"
I would love that, but I'm not sure if there's a demand as high as all afols are expecting. we'll see how the pirate bay and the medieval blacksmith would sell.
ps. If they bring back pirates I hope they will not be like 2012/2013ish sets
@superteo said:
"I would love that, but I'm not sure if there's a demand as high as all afols are expecting. we'll see how the pirate bay and the medieval blacksmith would sell. "
I think children love the fantasy behind these themes, it's like dinosaurs - something every kid likes to play with.
Imagine how many more marvel sets they would sell if sets were film accurate and minifigs had leg printing/were more film accurate! Fingers crossed for good upcoming hellicarrier and avengers tower sets!!
Uff, looks like no one is going to lose their job this year!
@darthnorman said:
"Imagine how much more it would be if they brought back Pirates and Castle! ;)"
Lego tried multiple times, and they flopped. Most of the interest for these is from adults. Lego has focus groups with kids, and probably not showing much interest compared to the modern themes. I would love to have these too, but it is wishful thinking. At least they do the Ideas sets, so did not forget about us, but it is pointless to do a whole theme for adults, D2C sets do a better job on that end.
Nice to see the company is healthy. Of all the companies in the world whose products I use, I think Lego is the one I would miss the most if the company disappeared. Hail to the Brick.
Good, I hope it means better sets this year and the company will need the funds to the hit everyone will take.
Neat
The more interesting point to me will be the results the same time next year.
Especially whether Technic will still rank among the best selling themes.
By the way, I find it telling that apart from Star Wars (which I bet is on a declining trend - if we could only get a detailed look at the numbers say from 2010 to 2020), all the top best selling themes are non-IP themes, especially the oldest ones (City, Creator and Classic - and to a degree Technic).
Anyway, I am happy for the employees at TLG in that their jobs appear to be a tad safer - for the time being.
I wonder how much the secondary market is contributing to this.
@fulcrumbop said:
"I wonder how much the secondary market is contributing to this."
As the purchase of BL only completed in January, nothing?
@AustinPowers said:
"By the way, I find it telling that apart from Star Wars (which I bet is on a declining trend - if we could only get a detailed look at the numbers say from 2010 to 2020), all the top best selling themes are non-IP themes, especially the oldest ones (City, Creator and Classic - and to a degree Technic)."
The old themes also have the most sets out of all themes, except Classic, but that is the only option for bulk bricks so no surprises. In addition, their appeal is fairly generic (everyday life, police, family houses, vehicles, etc), while IP sets will always be a little more niche and demand gets fragmented across multiple IP's based on the customers' interests, so the sales figures are not telling anything to me in particular. Especially not that non-IP sets would be any way superior to IP sets.
Lego, please bring back classic space!!
@AustinPowers said:
"......By the way, I find it telling that apart from Star Wars (which I bet is on a declining trend - if we could only get a detailed look at the numbers say from 2010 to 2020)..."
TLG needs to diversify those IP themes with sets they are both long overdue a return (OT Tie Bomber) and things they haven't made before (Master Builder Geonosis Colosseum and Jedi Temple).
27% increase in number of visitors to their website. That's a huge increase - hopefully that means they will address some of the issues they have when high demand items go on sale.
I know this has already been stated, but it is extremely refreshing that non-IP themes are doing well. I feel like that's when LEGO can flex their creative muscles even more.
Still waiting to hear about the collaboration with IKEA, I think that announcement was originally made spring 2018.
Marvel and SW sells because Movies.
It’s fairly clear from the best 2019 theme poll that the Star Wats sets remain popular and backed by a different kind of afol who’s only Lego interests are Star Wars. I say afol because they care enough to visit this site and vote!
Oh, and I’m out of the loop- has the world actually ended after Bricklink was bought?
@Brick_Bricky_McBrickface said:
"Imagine how many more marvel sets they would sell if sets were film accurate and minifigs had leg printing/were more film accurate! Fingers crossed for good upcoming hellicarrier and avengers tower sets!!"
Helicarrier will most certainly be a disappointment seeing that its a significant downsize from the much larger retired set. Not looking forward to that. I can't wait for the new avengers tower. Plan is to purchase 4 and make a UCS Avenger's tower for my city.
Hopefully the resurgence in Super Hero sales has brought LEGO to increase production quality on their movie sets
Crazy that Ninjago isn't in the top ten anymore. Funny how people had been calling it "the new BIONICLE" since it came out and now it's about as old as BIONICLE was and is starting to wind down.
Hopefully it stays around for a good long while though. Even Bonks had to reach average sales before TLG cut it off, so if Ninjago is still top 11 or 12 we'll have quite a few more years of it.
TLM2 didn't sell well? I'm more surprised that Ninjago wasn't in top either. Last year was in my opinion one of the better for Ninjago theme wise. Legacy, with throwbacks and then the fire/ice theme with several cool parts and creatures. Then the comeback of Spinjitzu
Glad HP is doing well.
@AustinPowers : Yep, Star Wars being the only licensed theme among the top five has been a pretty consistent trend for several years now. It's something I wish more people would keep in mind when new licensed themes get announced — the majority of licensed themes are small and short-lived compared to LEGO Star Wars, and so there's no real reason to be afraid of licensed themes totally displacing non-licensed themes at this point.
@inversion : I'm not sure if it's really accurate to say that recent Pirates and Castle themes "flopped" — even LEGO's shorter-lived themes are often profitable in their own right. I think it's safe to say that these categories will continue to be renewed or refreshed on occasion. That said, they haven't yet managed to become major hits on the level of themes like City, Friends, and Ninjago, and so for the time being it's probably not realistic to expect them to reclaim their place as enduring core themes like they were in the 90s.
For that to happen, they'll have to first demonstrate at least enough popularity and staying power to eke out a successful two– or three-year run. And as much as a lot of us want to believe it, designing themes to suit our adult tastes is rarely key to that kind of success. After all, stuff that drives many AFOLs up the wall like the number of fire and police sets in LEGO City, the wacky genre-mashing and spinner/flier gimmicks in LEGO Ninjago, and the cutesy aesthetic of LEGO Friends have most likely been instrumental to their enduring success.
@GSR_MataNui : Out of curiosity, where are you seeing a top ten list? I'm seeing top 5/top 6 lists a few places (which oddly enough don't quite match up between the infographic, and full PDF) but not any top ten lists.
Ninjago is rapidly declining. The sets just aren’t very appealing any more: the Land Bounty was quite ugly (in my opinion) and overpriced. Legacy has been a disappointment for me. Rather than redesign old sets, which separates them from the show (unfortunately the show is also worsening), make sets from the TV show we missed. The revision of the Legacy minifigures also does nothing to sell those sets: they would be much more desirable if old minifigs came back. Make the Black Bounty, or the Overlord dragon. Make a more accurate set of Chen’s island. Make the Preeminent, or Borg Tower. So much wasted potential!
Is Classic Space really ever going to "come back" as long as they have the Star Wars license?
Not to kill off hope but, maybe its a pointless hope to have?
It was me.
Nice. More sales, more profit than previous years. Just as usual.
As a prize, they will give us even higher prices for the sets. Just as usual too. :)
"...and by 2025 will use only sustainable packaging, including phasing out single-use plastic packaging."
Should be done ASAP!
@lordofdragonss said:
"Marvel and SW sells because Movies. "
So what does that say about the future of the SW theme?
SW LEGO did just fine between Revenge of the Sith (2005) and The Force Awakens (2015), so I'm sure it'll continue. And Star Wars movies aren't done, it's just the Skywalker Saga that's finished.
Enough profit for a Lego-Store in Stuttgart ...
@Jack_Rizzo said:
"It's kind of funny how all I hear are complaints about the most recent waves of Marvel sets/minifigures but it's still a best-selling theme, clearly LEGO are doing something right there."
I passed on more sets the past two years than previous years, but I don't think I've spent less money on Lego. On the contrary: What usually happened was that I bought two or more of the sets I did like. That was a result of doing my own mods on existing sets (very inspired by Derboor's mod work for example) or sometimes certain sets make a great parts pack for the price.
@Jack_Rizzo said:
"Also long live Friends, we've had so many great parts and colours because of that theme and I'm glad that, presumably if it's selling well, we'll get more."
I second that 200%. I don't belong to the typical target audience of the Friends theme, but it gave us wonderful additions and found it inspriring in certain sets. So I buy Friends sets every year, although very rarely for the set itself, but for the great parts.
It's a shame the Disney Star Wars movies were not that good (and somewhat reflected in audience attendance), otherwise it would've givin us better SW sets I think. I love the original trilogy stuff and some of the prequels, but the Disney Star Wars stuff I find boring.
Good to see Lego stays a healthy company.
It’s odd to see that Marvel is doing well. Mostly because of the complaints of the last few waves. Other than that, you should kind of expect Star Wars, City, Creator and the like to be the most popular.
If there are 18800 people working for LEGO, does that mean that at least 19000 boxes of 4002019 Christmas X-Wing were produced and therefore it is way overpriced on the secondary market (considering some retail sets may cap at 10000 boxes, not to mention the rare inside tour exclusives).
Their top 6 infographic and top 5 in the report are different, weird.
Top 6 has Classic in it , Top 5 has Creator in it.
surprised to find speed champions missing, that theme always seems so popular.
"We are also satisfied with the performance of our IP sets and our new theme LEGO Hidden Side which seamlessly blends building and augmented reality."
I bet they would have been even more satisfied if they didn't have to discount Hidden Side 30-50% all over the place to shift excess stock.
@stlux said:
" @fulcrumbop said:
"I wonder how much the secondary market is contributing to this."
As the purchase of BL only completed in January, nothing?"
Didn't the Bricklink takeover happen back in November? Plenty of time to reap the holiday windfall.
@darthnorman said:
"Imagine how much more it would be if they brought back Pirates and Castle! ;)"
I still dreaming about this... :(
@darthnorman:
Historically, they've found that even the licensed themes don't sell as well when they don't have a movie or TV show to hang them off of. Non-IP themes don't have any potential for a blockbuster hit driving sales.
@AustinPowers:
Compare the graphic against the text and you'll see that Creator is _NOT_ in the graphic, but took Marvel Superheroes' place on the text list. Also, best-selling doesn't mean most-profitable, since Classic probably includes those bulk boxes and tubs that price out at about 20% of what a comparable minifig-based them normally runs.
@Brickmasterboy:
Are you kidding? The LEGO Movie made almost $470 million at the box office off a modest $60-65 million budget and no existing IP to back it up. For the sequel, they bumped the budget to $99 million, and barely cleared $192 million. The movie just didn't deliver, and that translated into wimpy sales...for most sets. Benny's Space Squad was still burning up the shelves, but I think we all know that has very little to do with the movie (especially since none of the other Classic Space minifigs had more than a fraction of a second of screen time, no speaking roles, and no mention of the names listed on the set box).
As for Ninjago, GSR_MataNui hinted at one of the major factors, which is that the original fanbase is aging out. That is to say, like Bionicle, the theme had a massive fanbase with kids, but kids grow older. They get interested in other things, stop playing with toys, and move on with their lives. Younger kids coming in might show interest in the same theme, but far more likely is that they latch onto other newer themes that have little to no history, or they get attracted to one of the "evergreen" themes (often because of a strong attachment to one or more movies that tie into those themes).
@lynels:
They haven't yet that I've experienced, over four decades of experience. Still around $0.`10/pc in most cases.
@560heliport:
SW had the Clone Wars series to carry it during most of that gap.
@Legorides said:
“It's a shame the Disney Star Wars movies were not that good (and somewhat reflected in audience attendance), otherwise it would've givin us better SW sets I think. I love the original trilogy stuff and some of the prequels, but the Disney Star Wars stuff I find boring.
"
They’ve released 5 films. 4 of them grossed over a billion dollars. Of two of the other major film franchises, Harry Potter and LOTR, only 1 film from each beat Rogue One’s haul. The narrative that the Disney SW films were flops or unsuccessful is completely contradicted by the actual data.
@PurpleDave: That was my point. Star Wars isn't just movies. Also, I'm sure Disney didn't spend five billion dollars for Star Wars to make just five movies. There will be more.
I'm very glad the Harry Potter sets are performing strongly. I'd like them to stick around for quite a while.
Also interesting "We are also satisfied with the performance of our IP sets and our new theme LEGO Hidden Side which seamlessly blends building and augmented reality."
Seems Hidden Side might have been saved for now, contrary to the rumours that said it was going to the chopping block.
@fulcrumbop said:
"I wonder how much the secondary market is contributing to this."
I think by definition it could not possibly contribute to this............
@tgewin said:
"The narrative that the Disney SW films were flops or unsuccessful is completely contradicted by the actual data."
That’s why I wrote “somewhat reflected in audience attendance”. The attendance of the trilogy declined with Episodes 8 and 9, compared to 7. Did they still make money? Offcourse, although Solo lost money on the domestic market. General sales of merchandise tied to the Disney Star Wars was also down. Thankfully Lego SW is more than just Disney SW.
@fulcrumbop said:
" @stlux said:
" @fulcrumbop said:
"I wonder how much the secondary market is contributing to this."
As the purchase of BL only completed in January, nothing?"
Didn't the Bricklink takeover happen back in November? Plenty of time to reap the holiday windfall."
There's usually quite some time between the announcement of a merger/acquisition, and it actually closing (i.e. happening). In some cases this process can take a year. Seems that in BL's case, this happened around Dec 20, so those couple of days wouldn't have had a material impact anymore on their 2019 numbers.
Not that the BL acquisition would make a material difference to TLG's numbers anyway: don't overestimate how much money BL brings in. The highest revenue figure I find is USD 10M, with some other estimates much lower. This is revenue - not profit! That's a tiny drop in TLG's USD 5.74B revenue or their USD 1.24B annual net profit.
@560heliport:
But you have to look at the context. In 1999, the theme launched on the back of Ep1 (which set records for both the sheer amount of movie merchandise sold, and also for the amount left unsold when the dust settled). 2000-2001 saw a drop in sales, which picked up again with Ep2 in 2002. Again, 2003-2004 took a hit, and 2005's release of the last Star Wars movie gave another boost. The final gap from 2006-2007 yet again had a soft market, but 2008 is when The Clone Wars debuted, alongside a nationwide launch of all TCW-related product, and huge countdown clocks at TRU. From 2008 until Disney killed TCW, sales were strong because the series (after a rocky start) grew a strong following. Rebels was the only Disney Wars production for several years, but that show again found its way into fans' hearts. Since then, the last two Disney Wars movies had tepid responses at the box office, and I haven't heard a peep about anyone watching Resistance. Disney/Lucasfilm announced that they were going to stop cranking out films on such an aggressive schedule. That basically leaves the entire LEGO Star Wars theme riding on the success of The Mandalorian at the moment. That's a show that, on top of having such a short first season, has a limited audience due to being locked behind a paywall. I'm not sure that'll be enough. Don't be shocked if LSW ends up slipping out of the "Top Themes" category in the coming years.
@deejdave:
By definition it absolutely impacts this, since the sale took place in 2019. That means they handed over a fat bankroll on last year's accounting books, which reduced their end of year profits. They may have also started receiving dividends from BL, which would have provided a modest bump that would barely start to offset the massive expense of buying the site.
@stlux:
When they talk about revenue at Bricklink, keep in mind that this is not just the total dollar amount that's being processed on behalf of Bricklink sales. That's the fees that are being collected on sales invoices that account for Bricklink's gross revenue. From that, yes, they have all the normal business expenses, like payroll, and the cost of running, upgrading, and occasionally outright replacing the servers that host the site. That still has to leave a seven-figure net profit, I'd think. Yeah, it's not even pocket change compared to TLG's numbers, but every bit helps.
I wonder how LEGO Overwatch is doing. I’ve been seeing a decent amount of the sets on sale, and haven’t heard much in the way of new sets on the horizon.
@djcbs: Even themes that sell well aren't necessarily planned or expected to become long-term hits. After all, if LEGO kept all their themes around indefinitely they'd never have room for new ones! Even having performed well, I have a strong feeling Hidden Side will conclude either at the end of this year or sometime next year, since a two to three year run is pretty typical for action/adventure themes that aren't considered evergreen.
Compare with themes like Power Miners, Atlantis, Legends of Chima, and Nexo Knights. They were all successful themes in their own right, but were wrapped up after just a few years to make room for the next big thing. That was originally even supposed to be Ninjago's fate, up until LEGO realized how much more its popularity had grown and endured than they'd previously anticipated!
@Aanchir:
I think Ninjago got returned to production, not because they realized it was a popular theme (they already had sales data showing that), but because they realized how big a revolt they'd have on their hands if they cancelled it.
I like coming here and seeing all of the people that act as though they’re marketing experts and know the exact reasons for all of these data points.
I think the new themes are too “themed” how else would you say that. Today’s sets are 95 % based off movies and current things the main two that aren’t are city and classic. I don’t like that. LEGO was great up till the early 2000s when they really started to go with current movies and such. I just wish they would come up with more original themes like they have in years past.