Historic Sales Drop for Lego Raises Concerns About Future of Physical Toys
Lego, the iconic toymaker, may be facing its biggest test since a brush with bankruptcy in the early 2000s.
Sales fell last year for the first time since 2004.
Chief Executive Niels Christiansen says the time of extraordinary growth is over.
“This period of supernatural growth has kind of come to an end, and we’ve had some years where we were more flat,” Christiansen told Reuters.
And last year’s figures were less than flat, with sales falling by 8 percent. That’s down from a 6 percent increase in 2016 and a far cry from the 25 percent growth posted in 2015.
And it’s not just kids who care about Lego, investors are taking note as well, as Lego kits have consistently delivered higher returns over the past decade compared to the S&P 500 or physical gold.
According to a 2015 Telegraph article, investors are better off putting their money in Lego sets than shares or gold.
The paper writes that Lego sets kept in pristine condition have increased in value 12 percent each year since the year 2000, while in that same span, the S&P 500 has returned about 4.2 percent annually, and gold 9.6 percent.
Lego’s CEO tries to allay concerns, saying the plastic bricks are here to stay. He said the drop in sales is about clearing a build-up of inventories.
But there’s a twist.
Lego enthusiast site, BrickPicker, rich with Lego investment advice, reveals a troubling trend when it comes to some products.
And according to “Jason” at YouTube channel BrickShow, a Lego enthusiast channel with over 400,000 subscribers, the writing’s on the wall for all physical toymakers, not just Lego.
He claims to have inside knowledge about the industry and reveals the biggest trend that now threatens physical toymakers.
Watch the video to see what some are saying is to blame for the drop in Lego’s sales and why bouncing back may not be so easy.
Reuters contributed to this report.