Investors in fantasy games and miniatures retailer Games Workshop (GAW) are having to get used to a spell of more modest performance as tough prior comparative numbers and well flagged cost inflation puts the brakes on a long run of forecast beats.
The DIY investors favourite again posted solid growth in the first half, with revenues to 28 November up 6% to £198.8 million on a constant currency basis. Trade accounts contributed 56.7% of total revenues, retail stores 21.8% and online 21.5%.
However, this was as expected by analysts and the market, seeing the share price drift 0.3% to £97.24.
REOPENED STORES
Trade sales grew 8%, while a reopening of retail stores helped them increase revenues by 17% and online revenues fell 7% after a strong performance in the prior year.
Despite an increase in volumes, higher staff costs and carriage costs and increased investment in new facilities and inventory resulted in the operating profit dropping 11% to £74 million, representing a margin of 37%, a still impressive outturn and the second highest in the company’s history.
Including higher royalty payments of £20.2 million compared with £8.7 million last year, overall operating profit was 2% higher at £94.2 million.
BUILDING BRIDGES
In a nod to recent ructions about being overly protective of its intellectual property the company said it was ‘committed to supporting fans as they create their own Warhammer-related events, videos, articles, podcasts.’
To this end the company said it is building a community outreach team to support creators and prominent community members who ‘champion the Warhammer hobby outside of our own pages and spaces.’
Investment director Russ Mould at AJ Bell commented: ‘While it is understandable that Games Workshop is protective of its IP, it needs to tread carefully. The value of the company is inextricably linked to fans’ devotion to the Warhammer brand.
Despite concerns around fan loyalty, customer engagement appears strong as evidenced by a 15% increase in Warhammer-community.com users across all territories in the first half.
Disclaimer: Writer Martin Gamble and Steven Frazer, who edited this article, both own shares in AJ Bell which owns Shares
