Lego’s sales slowed down during the first half of 2016, but it’s not because its popularity has begun to wane. Just the opposite: the colorful bricks are more popular than ever.
The company published its sales figures for the first half of 2016 earlier this week, announcing a 10 percent growth in sales from 2015. That number is below what the Danish company has typically reported, around 15 percent each year for the last 12 years.
Growth was so high in 2015, the company had trouble meeting demand
The reason for the slowdown in growth is due to the company’s decision to pull back on their marketing, according to Reuters, and comes as Lego has invested in growing its manufacturing capacity. The company experienced strong sales in 2015, in fact, but had trouble meeting demand, according to The Wall Street Journal.
Though sales in North America remained flat, Lego reported strong sales in Europe, where the company is well-established, and in Asia, where it has been growing in popularity in recent years. In October 2015, the company’s CFO, John Goodwin acknowledged that the rapid growth had begun to put pressure on Lego’s factories: "The high demand also puts a strain on our factories around the world," he said.
This year, Goodwin noted that the company is planning to get back on track for the upcoming holiday season, and has begun to plan for a future of continued strong demand.
Lego has expanded its manufacturing capacity and hired thousands of workers
The company began construction of a new factory in Jiaxing, China (which will open in 2017), continued to expand another in Monterrey, Mexico, and announced another expansion in Hungary. It also hired an additional 3,500 employees. Goodwin noted in the statement that "these investments in people and infrastructure will obviously have an impact on our short term profit growth. But they are part of our long term plan to sustain the development and delivery" of the company’s signature products.
The growth is remarkable for a company that had previously been on the brink of bankruptcy just a decade ago. Its resurgence came as the company began to produce tie-in products to film franchises such as Star Wars and Harry Potter. Its popularity has also risen with new product lines and a growing film franchise, which began in 2014 with The Lego Movie. Two years ago, Lego became the world’s largest toy company, and that it’s ready to grow even further.