Games Workshop shares fall as it misses sales target

Games Workshop posted record sales for the six months to the end of November, but missed targets, sending shares down 5 percent.

The Warhammer figurine maker told investors the 7 percent increase in sales to £226.6 million is “not where we wanted to be, especially in the US,” where sales were flat on a constant currency basis from a record year last year .

Pre-tax profit fell 5.2 per cent to £83.6m as it suffered from a fall in license profits, but this was before the blockbuster deal with Amazon announced in December.

While the company reiterated that it has not yet signed any contracts, the deal to adapt Games Workshop’s characters into movies and TV series is expected to be lucrative.

“We have nothing more to say at this stage,” the company said.

‘We will keep you informed. We remain confident that we will bring the worlds of Warhammer to the screen like you’ve never seen before.”

Games Workshop Shares fell 5 percent to £86.70 in morning trading on Tuesday.

However, they’re up 18 percent last month thanks to the Amazon deal, and 242 percent over the past five years.

The Nottingham-based company said it saw a “major” sales recovery in Australia, Canada and the UK, but sales in the US remained flat.

Store-owned sales were up nearly 10 percent at constant exchange rates, trade sales — or those to independent retailers, agents and distributors — were up 3.4 percent, but global online sales were down 0.5 percent, in line with the expectations.

It lost about £2 million in net trade revenue in Russia due to the war in Ukraine, and about £1 million in China due to Covid restrictions, but this was not as bad as previously predicted.

Overall, the company admitted that strong global sales are a “relatively new” trend and are proving to be a “reasonable challenge.”

An upgrade of its IT systems is also taking longer and costing more than previously expected.

Meanwhile, rising costs for materials, shipping and labor hurt gross margins, which fell 4.5 percent to 64.1 percent.

The company said Brexit has also added costs and made it more difficult to find staff with “language skills” in the UK to support its European customers.

As a result, it has opened a new trade sales office in Barcelona, ​​which will have a workforce of around 45 once fully staffed.

But overall, CEO Kevin Rountree said the company was “on top form.”

“Another rewarding and successful period for the global team with core revenue exceeding £200m for the six months for the first time.

“We will continue to focus on making the best miniatures in the world, securing new licensing deals with partners to exploit our IP outside of our core business and support our employees.”

Russ Mould, director of investment at AJ Bell, said: “Games Workshop has an excellent proposition in a brand with a growing and extremely loyal cohort of followers, it just needs to get its infrastructure up to speed to take full advantage of it.”