How the corporate retains beating the toy business

Lego simply put up one other banner yr — with assist from a behind-the-scenes secret weapon.

The Danish firm on Tuesday reported a 12% bounce in income to 83.5 billion Danish kroner, or $12.9 billion, for fiscal yr 2025. Working revenue rose 18% yr over yr to 22 billion Danish kroner, or $3.4 billion, the corporate mentioned.

“Once we have a look at the expansion space, it is form of fairly broad-based within the sense that it isn’t one product or one theme, it is just about throughout the board,” Lego CEO Niels Christiansen instructed CNBC.

Lego’s client gross sales jumped 16%, outpacing the general toy market’s 7% progress over the identical interval, the corporate reported. Lego has steadily outperformed the toy business for the reason that pandemic, rising its market share and its area on retail cabinets.

The brickmaker’s secret: a mix of trendspotting and a streamlined provide chain.

Lego has a hearty licensed product line, that includes units based mostly on a variety of common movies, TV reveals and video video games, in addition to a considerable variety of in-house manufacturers like its flower preparations, artwork items and architectural buildings.

Final yr, Lego launched its largest portfolio ever, with greater than 860 units hitting cabinets, the corporate mentioned. Round half of these had been new objects.

In increasing its catalog of merchandise, Lego has additionally grown its client base. Gateways into the model equivalent to its line of botanicals — vegetation, flower bouquets and succulents — and its ongoing partnership with Epic Video games — which brings Lego to the digital area and components from the favored online game Fortnite into the bodily world — have inspired newcomers into the brick-building area, Christiansen mentioned.

As soon as there, these prospects uncover different units and proceed constructing. And it isn’t simply youngsters, grownup builders are an necessary piece of Lego’s gross sales.

Toy consultants instructed CNBC that Lego was forward of the curve, embracing adults as a key toy client lengthy earlier than the business coined the time period “kidult.” Adults shopping for for themselves account for between 25% and 30% of all world toy gross sales, in keeping with information from Circana.

“We hit very well on a number of completely different sort of merchandise and methods of constructing and keenness factors,” Christiansen mentioned.

One of many firm’s current additions to the portfolio is its partnership with Formulation One auto racing. Lego has been current at F1 races since final season, internet hosting in-person actions which have included practical, life-size vehicles and handcrafted trophies made out of bricks for podium finishers.

F1 constructing units vary from Duplo units for preschool kids, conventional units for informal builders and Lego Technic units for extra superior crafters. Moreover, as a part of the continuing relationship between the 2 manufacturers, Lego has signed on as a workforce sponsor for an F1 Academy automobile beginning in 2026.

However Lego’s actual secret weapon in outpacing the toy business is not as flashy.

Lego has developed an extremely environment friendly provide chain, which permits it to provide merchandise nearer to their last retail vacation spot.

For instance, proper now the corporate’s Mexico-based manufacturing facility provides the Americas, whereas its Hungary manufacturing facility helps provide elements of Europe, the Center East and Africa. Lego lately opened a Vietnam location to service the Asia-Pacific area and is ready to open up a brand new facility in Virginia in 2027.

Christiansen mentioned the brand new U.S.-based manufacturing facility will assist sustain with the rising demand for product within the Americas.

Not solely does this make the transport course of extra environment friendly and shorten supply instances for followers, it additionally reduces prices. Lego can tailor what it is manufacturing based mostly on regional demand, that means it isn’t creating extra stock.

Lego will also be extra nimble than its opponents throughout commerce disputes or transport disruptions as a result of its factories are usually not all concentrated in a single space.

“You come out of a yr like 2025, and we have seen that progress that was past our expectations, and … what a mountain to climb,” Christiansen mentioned. “Alternatively, now we have actually sturdy momentum. It continues all year long and into this yr. So, I feel we be ok with rising on prime of ’25, possibly to not the identical progress price. Our expectation can be high-single-digit, which might be incredible.”

In 2026, Lego is introducing units based mostly on the likes of Pokémon, “Lord of the Rings” and The Legend of Zelda, in addition to launching its new innovation: the Lego Good Brick. The brand new high-tech, two-by-four Lego brick, which is a part of a number of new “Star Wars” units, accommodates sensors that react to motion and play sounds and lightweight up when performed with.

“So I feel there are a lot of various things that ought to take properly all year long,” Christiansen mentioned.