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Is the Gap Between Hasbro and LEGO Narrowing More Than Ever Before?

9/23/2013
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With the release of the company’s half-year results for 2013, speculation has been building that LEGO is now the second biggest toy company globally, overtaking Hasbro. When looking at the global rankings of toy companies and the results published by LEGO, there are a few things which need to be considered. The most important is the performance of each company at Christmas, with the toy industry heavily reliant on the festive season.

Top Three Companies in Traditional Toys and Games Globally in 2012

Source: Euromonitor International

In 2012, the competitive landscape in traditional toys and games showed a significant gap between second and third place. The data above only takes into account sales of toys and games, therefore discounting other products such as books and clothing as well as amusement parks. We estimate that LEGO achieved sales of around US$270 million from its LEGOLAND amusement park in 2012. Such figures may skew the results released by LEGO, calling into question just which are the largest actual toy companies in the world.

First and Second Half-Year Revenue Comparison for Hasbro and LEGO Globally, 2012/2013

Source: Euromonitor International

In 2012, LEGO’s sales exceeded those of Hasbro after the first six months of the year, according to figures released by both companies, taking into account the entire operations of each. However Hasbro performed much better than LEGO during the last six months of the year, primarily due to its Christmas sales. Therefore, any fluctuations in company ranking should be seen in context of the entire year so as to take into account any seasonally adjusted sales.

LEGO – constructing a monopoly?

It has been well documented that construction toys was the most dynamic traditional toys and games category with a CAGR of 12.2%. This performance was predominantly driven by LEGO and
its innovative product range targeting both genders as well as featuring licensed brands in order to maximise sales. The gap is certainly closing between Hasbro and LEGO but to say that their positions have been reversed is premature. Other toy companies are also paying more attention to the growth in this category, seen most recently from Spin Master’s acquisition of Meccano, with the company now having its own brand in this category to generate revenue. However, if LEGO continues to perform as it has and if it can edge out Hasbro during the Christmas sales, even the revenue captured from LEGOLAND will not inhibit LEGO’s ability to climb the global rankings.

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