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Oh, Snap! LEGO Sales Surpass Mattel
Danish Toy Maker, Boosted by Popular Movie, Takes Toy Crown for First Half of
2014
By Jens Hansegard of wsj.com.
STOCKHOLM : The LEGO brick has toppled the Barbie doll—at least for now—in
children’s affections.
Toy maker LEGO A/S on Thursday said its revenue in the first six months rose 11%
boosted by “The LEGO Movie” products, making it the biggest toy company in the
world by revenue and profit, ahead of Barbie-maker Mattel Inc.
The jump puts LEGO slightly ahead of Mattel in sales for the first six months of
the year. But it is still early going in the race for the global toy-making
crown for the year. Toy makers’ busiest period is the second half, thanks to the
holiday season.
Mattel disappointed investors and analysts in July with weaker-than-expected
first-half sales, hit by flagging Barbie revenue. Mattel in February bought
Canada’s Mega Brands Inc. for $366 million—a move into construction toys that
put the California-based company in direct competition with LEGO.
The Danish company’s spurt relied heavily on sales related to the movie, and it
is unclear whether momentum for the box-office hit and the branded products will
carry through the rest of the year.
“It remains to be seen how the The LEGO Movie line will continue to develop,”
Chief Executive Jørgen Vig Knudstorp said. The Warner Bros. movie, which will
launch on DVD in the second half of 2014, grossed $468 million world-wide as of
Aug. 21.
A sequel, “The LEGO Movie 2,” is scheduled to be released in 2017, and Warner
Bros. has already set the release of the Ninjago movie—based on LEGO
ninja-themed product range—for next year.
Licensing revenue from the movies isn’t as significant for LEGO compared with
the sales of its movie-related boxes of bricks.
First-half profit increased by 14% to 2.72 billion kroner ($273 million) on
sales of 11.5 billion Danish kroner, or $2.03 billion, up 11% from 10.4 billion
kroner in the same period last year, the company said. Mattel’s first-half sales
totaled $2 billion.
Closely held LEGO, which has said it has sold on average 86 LEGO bricks for
every person on Earth, said China generated the most significant growth in Asia,
with sales up more than 50% in the first six months.
LEGO growth comes despite continued difficulty in the toy business as children
turn more to tablets and consoles during play time.
LEGO Chief Financial Officer John Goodwin told The Wall Street Journal that the
toy maker must maintain a broad perspective if it is to stay relevant to
children as their play patterns evolve. While the heart of LEGO proposition
remains the physical experience of building with plastic bricks, the company
said it continues to look for ways to engage children on a number of platforms.
For example, LEGO Legends of Chima range, introduced in 2013, is now available
not only as boxes of bricks, but as online games, video content, a TV series,
and print comic books.
“Kids don’t make the distinction between the digital and the nondigital like
those of us who weren’t brought up in the digital age. For them it’s all just
one experience,” Mr. Goodwin said.
Operating profit in the first six months grew to 3.63 billion kroner compared
with 3.24 billion kroner last year.
From:
WSJ.com
-end of report-
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