Business has been so brisk at the world's most profitable toymaker that Lego did something unusual last year: It began looking for ways to discourage customers from buying its products.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The Danish company scaled back its advertising efforts amid a 25 per cent rise in annual sales, according to Reuters. It simply couldn't make enough toys to satiate demand in North America, and needed a break while it boosted capacity at its factories and increased its workforce by nearly a quarter.
"We feel we need to invest, to build some breathing space," Lego's finance chief John Goodwin explained.
Lego, a family-owned company founded in Denmark in 1932, has enjoyed booming growth for decades. The company has released thousands of sets of its eponymous blocks, forging licensing deals with popular brands including Star Wars, Angry Birds and Disney Princesses. It has also taken on iconic architecture: A 2989-piece model of the Sydney Opera house is for sale on Lego's website for $399.99, while a 561-piece White House set sells for $89.99. A replica of the Ghostbusters firehouse, meanwhile, is listed for $499.99.
And the company's dominance has extended into the company's seven Legoland theme parks, 125 retail stores and dozens of video games. The Lego Movie, a full-length movie released in 2014, brought in $US468.2 million ($610.4 million) at the box office.
The company's revenue has increased by an average of 15 per cent a year in the past 12 years, according to Reuters.
The efforts to quell demand seem to have worked - at least temporarily. Sales in the Americas remained flat during the first half of 2016, according to the news agency. (Revenue in Asia and Europe, meanwhile, continued to grow by double digits.) Overall, Lego's revenue rose 11 per cent to roughly $US2.35 billion in the first half of the year, ahead of the $US1.83 billion reported by Mattel, the maker of Barbie.
But executives at Lego are hoping to ramp up production in time for this year's Christmas season, Goodwin said:
"We are working very closely with our retail partners to ensure that as we go into the important holiday season, the back half of 2016, that we've got all of the levers pulled to get back on the growth trajectory."
The company is buildings its first factory in China, and is expanding existing plants in Mexico, Hungary and Denmark. Lego also hired 3500 employees in the first half of the year, increasingly its workforce to 18,500, according to the Wall Street Journal.
"In the past decade we have seen LEGO sales growth in the double digits year after year," Goodwin said in a statement in October.
"We are of course very excited about this development. [But] the high demand also puts a strain on our factories around the world."
The Washington Post
