Lego’s supply chain agility helps build sales during pandemic

Cons. Discr. - Durables 386 Coronavirus 469 European Union 699 Mexico 765 Quote Watch 321 U.S. 4830

Toy manufacturer Lego has reported H1 revenues which climbed 7.0% year over year in H1, including a 14.0% surge in direct-to-customer sales as demand expanded in the wake of COVID-19. The firm’s CEO Niels Christiansen noted that growth was helped by “our recently upgraded e-commerce platform and agile supply chain“. The latter has been particularly important for toy manufacturers during the start of the peak season, as outlined in Panjiva’s research of August 18.

Panjiva’s data shows that U.S. imports by sea and by land from Mexico linked to the firm surged 18.4% higher year over year in Q2. That’s likely extended in Q3 with a 33.8% surge in shipments by both modes in July and a 4.5x jump in seaborne imports in August to reach a record high.

Seasonal record for Lego in July as demand soars, supply chain adapts

Chart shows total U.S. imports linked to Lego A/S on a monthly basis.  Source: Panjiva

The firm has nonetheless had to deal with “higher freight costs associated with shipping products following temporary, government-mandated factory closures in Mexico and China“. Lego’s three-legged sourcing platform may have been instrumental in continuing the flow of products. 

The closure of manufacturing in Mexico resulted in a 399 TEU month on month drop in shipments in May versus April which was offset by a 326 TEU increase in shipments from Europe. The more recent surge in demand has been met by additional imports from Europe too. 

In July imports from Mexico were 2.6% lower than a year earlier while those from Europe jumped 88.3%. The latter may also reflect a change in mix of sets in Lego’s recent sets to more complex Creator sets preferred by adults as well as larger construction sets in the Harry Potter range.

Europe offsets Mexico, provides growth surge for Lego

Chart segments U.S. imports linked to Lego A/S by origin.  Source: Panjiva

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