How Lego beat out Barbie to become the king of toymakers
While Lego has been turning plastic into gold, Mattel has been struggling
Barbie's getting slammed by a ton of bricks — Lego bricks. Denmark's privately owned Lego A/S has edged out Mattel, maker of the Barbie doll, as the largest toy company in the world, based on sales over the first half of 2014.
The means that besides being a do-or-die period for retailers, as always, this year's holiday shopping season may also be a contest for the title of world's top toymaker.
Lego said Thursday that its first half sales rose 11 percent to just over $2 billion, powered by products related to The Lego Movie, which hit theaters in February and has taken in $468 million in worldwide box office receipts.
Lego has more than tripled its sales since 2008, even as kids increasingly spend their playtime with iPad tablets and other electronic devices. The building blocks are truly a global hit. Sales in China surged by more than 50 percent over the first half of the year, the company said. And as the Financial Times pointed out, even before its latest announcement, Lego "was already the world's most profitable toymaker as it reaps the benefits of the alchemy that allows it to turn plastic costing $1 a kilo into toys that sell for about $75 a kilo."
While Lego has been turning plastic into gold, Mattel has been struggling for a couple of years to work the same magic with the 55-year-old Barbie. Sales of the doll have fallen for eight straight quarters. In July, Mattel reported weaker-than-expected earnings and revenues as global sales of Barbie dolls dropped 15 percent in the second quarter and sales of Fisher-Price toys fell 17 percent. (Mattel's American Girl line managed to grow first-half sales by 6 percent from the prior year.)
Mattel earlier this year bought Mega Brands, which makes construction toys to rival Lego's, and that deal also weighed on the company's results.
While everything has been awesome for Lego, whether it can maintain its momentum with consumers and keep its crown as the world's top toymaker will depend on holiday sales.
"It is too early to say if the strong performance will be reflected in the full year results," Lego CFO John Goodwin said in a statement, "as the majority of Lego sales to consumers happen in the second half of the calendar year in a short time span of a few weeks leading up to the holiday season. The strong performance of The LEGO Movie products had a positive effect during the first half of 2014, and it remains to be seen how the line will continue to develop behind the highly anticipated launch of The LEGO Movie on DVD in the second half of 2014."
Another Lego movie is scheduled to be released in 2017, and a movie based on the company's Ninjago line is due out next year.
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