Let’s be honest: Life is hard.
Between work, home and whatever else we all have going on…
I’ll admit there are times when the stress becomes overwhelming.
In one of the college classes I teach, we discuss dealing with the stress of being a student on top of whatever else life throws at you.
My students have good ideas for dealing with it, such as yoga, listening to music, deep breathing, etc.
I’m too old for yoga, and deep breathing doesn’t help. I do listen to music, but that doesn’t really help with stress.
Instead, I reverted to something I did in my childhood…
What if I told you that while the broader toy industry has suffered over the last several years, this specific toy manufacturer was thriving?
Let me explain…
Toy Sales Struggle for Gains
You remember the long lines outside of malls and shops in the early hours of Black Friday.
We risked snow, wind, rain and potential personal injury to get the very best deals for the Christmas holiday.
It was why the holiday season was the money-making time of year for many consumer discretionary manufacturers.
Things changed when retailers trying to compete with Amazon and other online retailers decided to roll out Black Friday deals weeks ahead of time.
The deals were basically the same, just much earlier.
I was OK with that, but the toy industry has seen their holiday sales start to taper off:
To put it more precisely, toy and hobby retail sales have grown no more than 4.5% annually since 2022.
Toy sales this year are only expected to grow by a modest 3.3% on an annual basis.
Christmas holiday retail sales are only projected to rise 2.5% this year.
Does that all have to do with doing away with Black Friday? No, there are several other factors to consider:
- Inflation has made toys more expensive.
- Consumers are saving more of their money and avoiding massive holiday shopping sprees.
- Pandemic lockdown sales went through the roof (see 2021 in the chart above), but that demand has tapered off significantly.
Despite these struggles over the last few years, there is one toy company that continues to thrive…
Power of the Brick
While sales of teddy bears, action figures and whatever else kids are interested in are struggling, one toy is selling at near-record levels.
After coming close to bankruptcy in 2000, Denmark-based Lego continues to increase its market share in the industry.
Now, the toy brand known for its trademark tiny plastic interlocking bricks has turned into a worldwide phenomenon that rakes in billions every year.
Lego Revenue Grows to Over $9.5B in 2024
Lego’s revenue has exploded more than 68% over the last six years — from $5.7 billion in 2018 to $9.6 billion in 2023!
Its revenue growth is thanks in large part to its entry into the licensing space.
Lego has partnered with franchises such as Star Wars and Harry Potter, automobile manufacturers like Porsche and Mercedes, and even NASA and Formula 1.
It has been able to broaden its market share by creating projects that appeal to both children and adults … including myself.
The bookshelf behind my desk is filled with Lego projects, from the Artemis rocket to a bonsai tree and iconic Star Wars helmets.
Lego has shown that diversification and expansion can overcome headwinds in sectors like retail sales. While Lego is still a private company, it’s an incredible example of what happens when you adapt to the market you’re in.
Now, I’m moving on to my next Lego project (hint, hint… it’s the Mona Lisa) — not because I’m stressed, but because I really enjoy doing them.
Until next time…
Safe trading,
Matt Clark, CMSA®
Chief Research Analyst, Money & Markets
