Shares in Nottingham-based fantasy miniature wargames manufacturer Games Worshop (GAW) jumped 11% to £59 after re-opening warehouse operations. This will allow the resumption of sales across Europe and the US, with online orders set to restart on 1 May.
While the majority of its physical stores remain closed across the world, some outlets in China, Holland and Scandinavia have begun to re-open as those economies emerge from lock-down.
Pre-tax profit for the year-ended 31 May 2020 is expected to be at least £70m, which would be 14% below last year’s out-turn and 9% below current analysts’ current expectations of £76m according to data from Refinitiv.
BOLSTERING CASH
Revenues and profits have been impacted by the prior the closing of global operations, reducing cash flows and leading the company to secure a £25m overdraft facility for the next six-months with an option to extend for another half-year.
We have previously highlighted the operational leverage of the business which, in good time allows profits to rise faster than revenues as a lot of costs are relatively fixed. When revenues fall, the impact on profits is exaggerated for the same reasons.
The future impact for Games Workshop will depend on how well its customers respond to the lockdown and if demand remains un-diminished, a higher proportion of products sold will need to be fulfilled through online channels.
