The Lego Group has suffered a steep fall in profits, figures from its half year results show, as demand for the plastic bricks maker showed signs of dwindling amid a tough economic climate.
Operating profit at the children’s toy brand reached DKK 6.4bn (£740m) during the first half of the year, down considerably from DKK 7.9bn (£910m) when compared to the same period last year.
Revenues only managed to climb one per cent compared to the same term last year and net profit slumped to an unimpressive DKK 5.1bn (£590m) down from £710m.
A tougher return to pre-pandemic shopping levels in its Chinese market played a role in its slowdown in profits, with Lego citing slower retail activity in the region.
It comes after the brand last year, encouraged by its pandemic success, revealed plans to open a number of stores in China and also opened a flagship store in Chongqing, China last October.
“Sales in China were impacted by a slower than predicted return to pre-pandemic shopping habits,” the company said.
“The company will continue to expand its retail footprint and online presence in China in 2023 and beyond to reach more children.”
Lego Group assured that it was continuing to trade in line with company expectations and said that consumer sales in its established markets such as the Americas grew.
“We are satisfied with our performance; especially as it has been a challenging six months for the toy industry,” Niels B Christiansen, chief executive of Lego, said.
“Overall, our performance is in line with expectations, after three consecutive years of extraordinary growth and we are grateful for our great colleagues who work each day to inspire children through play.”