Life in plastic is proving more fantastic for Lego than for other toy companies lately. The Danish plastic brick maker recently reported that it made nearly $1 billion in profits in the first half of 2021, with sales up a staggering 46% from the same period a year ago.
Its sales were also nearly double that of its closest competitor, Hasbro (maker of Play-Doh and My Little Pony), while its profits were 10 times greater. Barbie-maker Mattel, meanwhile, was $118 million in the red for the first half of the year.
Lego was primed for success during the pandemic. Its sales spiked 13% year-over-year in early 2020, as parents tried to keep kids busy and adults themselves turned to playing with plastic blocks to pass the time. (Notably, sales of the company’s most expensive and intricate sets grew by 2.5 times in the first half of 2020).
More surprisingly, though, the surge has shown no sign of abating since lockdowns were lifted. Lego’s recent financial results confirm what many of us have anecdotally observed: While some people returned to vacationing and partying, others remained largely home-bound, and busying themselves with projects like building a 9,090-piece Lego replica of the Titanic (the brand’s largest ever set, released last week).
In response to brisk demand, Lego is expanding both its staff and inventory. According to data tracked by Thinknum, the number of people with Lego listed as an employer on LinkedIn has grown 15% in 2021, and by roughly a third since the beginning of 2020. (The company’s headcount growth has outpaced Hasbro and Mattel, according to the data).
There’s no sign of slowing down either, a spokesperson for Lego told us. Even after 18 months of steadily increasing its workforce, the company is currently hiring for more than 550 roles in digital and technology, including engineers, data scientists, IT and tech support, largely in Denmark, the UK and China.
Lego’s new openings offer insight into the company’s current strategy, which involves expanding both through e-commerce and brick-and-mortar retail to capitalize on the current Lego-mania. Many of Lego’s hires will work on improving Lego’s digital platforms — the company’s been investing in top-notch online companion products to their physical toys, like games and interactive websites. In 2020, Lego released VIDIYO, a partnership with Universal Music that lets kids make their own lego music videos with filters and special effects, as well as Super Mario sets that integrate with online games.
Other job listings for Lego, including the many for “item setup specialists” and sales associates aka “brick specialists — are aimed at opening hundreds of new physical stores around the world. While most retailers jettisoned real estate during the pandemic, in 2020, Lego has been charging headfirst towards brick and mortar.
Last year, the company opened 134 new stores, 91 of which were in China. Chinese consumers have been instrumental to Lego’s recent success (and recovery from nearly going bankrupt in 2003).
Lego CEO Niels Christiansen told the WSJ that building a brick-and-mortar footprint in markets like China, where parents are less likely to have played with Legos as children, is crucial. The company is slated to have 300 stores in 85 cities in China by the end of 2021 and 40 of the 60 new stores Lego opened this year are located there.
Another role Lego is hiring for is a “confidentiality director,” whose job is to keep new products from leaking. This is no small task for the company at the moment. It has rapidly expanded its products in order to capitalize on the pandemic Lego boom, and many, like the latest Titanic replica, have generated significant buzz.
According to the company spokesperson, 60% of the current products in Lego’s inventory, or roughly 700 new toys, were introduced in 2021 alone. By all evidence, novelty and innovation are great strategies for keeping customers shopping — new products drove 43% of Lego’s 2021 sales growth. Those included strong performers like new additions to the Lego Harry Potter collection (which includes elaborate models of characters like Hedwig and scenes like Diagon Alley), as well as Lego Super Mario, Creator Expert and the company’s Star Wars collection.
It’s an unlikely time for a toy company to be thriving so vigorously. Retail has generally been on the fritz thanks to a global supply chain breakdown, port congestion, a truck driver shortage, vaccine-related border restrictions and waves of coronavirus outbreaks.
As Americans are preparing to spend $1.3 trillion on holiday gifts — up from $1.19 trillion in 2020 — retailers from Nordstrom to Best Buy have been warning customers to shop for presents early, as they expect shipping delays and popular items to sell out quickly. Toy companies are vulnerable to logistics problems, as many of their products are manufactured in Asia. Those products tend to arrive in the U.S. at southern California ports, where inventory has been stuck without drivers to haul it away.
But Christiansen has said he expects Lego to be able to meet demand this holiday season in all of its markets. The Billund, Denmark-based company does seem to have a leg up over its competitors, such as Mattel and Hasbro, in this area. Its factories are spread across Europe, Asia and North America, close to the markets they serve, making Lego less reliant on international shipping than other toymakers.
Pawtucket, Rhode Island-based Hasbro’s revenue was up 24% for the first six months of this year, while El Segundo, California-based Mattel’s grew 43% over the same period. But sales were still outpaced by costs.
Of course, the hot streak won’t last forever, and it’s only natural for observers to try to predict when Lego’s sparkle will fade. “Don't expect 50% growth year on year-on-year," Christiansen told the Financial Times. "But we actually think this is real growth, and this is more a newfound level that we can grow more from.” In the meantime, job-hunters might want to take a look at Lego’s listings.