Bricks of gold: Lego's margins look impressive alongside luxury companies

Beyond the brick

‍One of Lego’s smartest moves has been to branch out beyond the humble brick. In the last decade, Lego have released 4 theatrical movies — including 2014’s ‘The Lego Movie’, which grossed over $468 million worldwide, paving the way for many more direct-to-video films, series and shorts. Its success in video games — often leaning heavily on other franchises with collaborations like Lego Star Wars — have fueled a virtuous circle between physical Lego sales and its media and entertainment empires.

With how playful Lego’s entire brand is, it’s easy to forget that the company is a — very successful — marketing-driven money making machine. However, more staggering than its sheer size, are the company’s margins.

Lego routinely ekes out profit margins that are more reminiscent of Ferrari than Furby. Indeed, for every dollar spent at a Lego store last year, a generous $0.28 was pocketed by the company as operating profit, aided by the ever-shortening supply chain that Lego uses to deliver to its key markets. For perspective, Mattel — the business behind Barbie, Hot Wheels, and American Girl — managed to skim just $0.12 from every dollar spent, while Hasbro, the custodian of classics like Monopoly and Play-Doh, netted only $0.07.

Indeed, you have to dive into the world of luxury to find comparisons that come close to Lego’s margins. LVMH, the French luxury empire that boasts Louis Vuitton, Veuve Clicquot and Tiffany & Co. among its brands, managed “just” a 27% margin.