Lego backers bullish on outlook despite price rises

He expects sales to reach over $100 million in the 2023 fiscal year, up from last year’s $70 million-odd that was impacted by store closures. Some store sales are tipped to be up on the pre-pandemic 2019 year, underpinned by both old and new customers from kids to adults and “Lego nerds” seeking the latest sets such as the Harry Potter’s Hogwarts Express train (being released later this month) or a Star Wars collaboration.

“We’re touching every consumer segment that you can think of, and so even if one gets hit by the economy, we’ve got different consumer groups that we’re attracting, and it’s a premium aspirational product that people want,” Mr Facioni said.

“No one knows what the economy is going to bring over the next 12 months. We saw inflation in the US trend down overnight, which was a nice positive signal, but we do remain cautiously optimistic.”

Despite cost of living pressures rising across food, energy and fuel, and interest rates, Alquemie managing director of licensed brands, Matthew Robertson, is expecting strong Christmas trade.

“There’s always a degree of the unknown … but I think based on what we’re seeing at the moment, and the visibility in terms of the product release schedule, … I think it’s one of the most exciting release schedules that I’ve seen,” he said.

The Lego Group implemented price rises from August 1, as its operating costs grew and raw material prices spiked. Prices will rise on between 150 and 190 products out of a portfolio of around 600, depending on the country.

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Mr Robertson said that while some prices had increased, there had been no drop off in volume over the past week. The group’s inventory position was well-balanced, it did not expect to have to discount to move stock, and new stock was dropping every week.

Lego was founded by Danish carpenter Ole Kirk Kristiansen who crafted a line of small wooden toys in 1932, but it was another 26 years before his son, Godtfred, patented the Lego brick, with its interlocking tube system.

There are five main factories for making Lego and it plans to spend $US1 billion ($1.4 billion) to build a new factory in Vietnam with production from 2024. Moulding is done in Denmark, Hungary; Mexico and China.

Mr Facioni said that with The Lego Group now in its fourth generation and still growing, “they’re bucking the trend in terms of the old saying that by the third generation the business gets destroyed”,

Alquemie’s other retail assets include online retailers SurfStitch and EziBuy, Ginger & Smart, Pumpkin Patch, and it recently bought General Pants Co. In May it struck a licensing deal with Disney’s National Geographic.