Stacked

Lego’s splurgin’ $1B on its first US factory to keep up with toy demand from America’s kids — and adults

Thursday, June 16, 2022 by Snacks

Billion-dollar Lego factory… some assembly required. Lego plans to drop $1B on its first US factory (in Virginia) as demand for its colorful blocks stacks up in one of its biggest markets. The family-owned Danish toy giant plans to spread the investment over the next decade, creating nearly 2K new American jobs.

  • Building blocks: Construction of the new carbon-neutral factory begins this fall, with the digs expected to be operational in 2025.
  • Supply stacks: Lego says the factory will help simplify its US supply chain, which has mainly been served by its Mexico factory.

“Go play with Lego, Elsa”… Despite inflation and the no-stimmy era, parents are still splurging on new playthings — an extension of the pandemic toy frenzy. Last year, Lego’s revenue jumped 27% to $8B as parents WFH’d with kids. Rivals Mattel and Hasbro also saw double-digit growth thanks to demand for iconic franchises like Hot Wheels and Barbie. Now:

  • Brick-flation: Lego plans to hike prices on some toy sets by up to 25% starting in August and warned its growth boom might slow.
  • Fine print: US toy sales ticked up this year after a period of unprecedented growth. But pricier playthings could force parents to trade down or wait for discounts.
THE TAKEAWAY

Playing wide is a hedge… While Mattel and Hasbro have focused on their target customer (kids), Lego has expanded its portfolio to appeal to consumers of all ages. That’s helped it grow faster than rivals. From intricate builds like the “Star Wars” Death Star (4K pieces) to nostalgic faves like the set of “Seinfeld” and James Bond’s Aston Martin, Lego’s adult offerings could help protect its biz — even if parents ditch kids’ sets.

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