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Lego will cross 500-store mark in China this year despite sluggish economy, CEO says

Brian Sozzi
·Executive Editor
·2-min read

Lego Group still plans to build brick by brick in China this year despite the country's yawning economic troubles.

"We are keeping our investments [in China] going," Lego Group CEO Niels B. Christiansen told Yahoo Finance Live (video above).

Christiansen said Lego Group — a private, family-owned company — will open 30 new stores in China in the second half of this year after opening 54 in the first six months. By year-end, Lego Group will have crossed the 500-store mark in China and have 1,000 stores worldwide.

The company is also expanding its factory capacity in China to support future demand, Christiansen added.

A boy looks at the Zhengyang Gate Tower of Forbidden City made with Lego bricks at a Lego store in Beijing.
A boy looks at the Zhengyang Gate Tower of Forbidden City made with Lego bricks at a Lego store in Beijing, China, Jan. 13, 2018. (Jason Lee/REUTERS) (Jason Lee / reuters)

Lego Group's moves come as multinationals assess their expansion plans in China amid a sluggish post-COVID recovery and elevated trade tensions with the US.

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To be sure, it has been a challenging summer for investors in China.

Hong Kong's Hang Seng Index recently slipped into a bear market. The Chinese yuan is hovering around 16-year lows. Markets are looking to China policymakers to offer more rate cuts to stem increasing weakness in the commercial property market.

Global investment banks are slashing their GDP growth targets on China to sub-5%. China's GDP in the second quarter grew about 1% from the first quarter. Household consumption on an annualized basis plunged 15% in the second quarter.

Christiansen conceded he has been "disappointed" by China's economic recovery from the pandemic. The baseline expectation for Lego in China was a return to pre-COVID traffic and spending patterns at retail stores.

That hasn't played out, however.

But the market is too big and important to ignore, Christiansen explained.

"I don't think it changes the fact it is a big market with a lot of kids and an opportunity for our brand," said Christiansen.

Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email brian.sozzi@yahoofinance.com.

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