Games Workshop records highest six months sales ever despite supply chain troubles and rising costs
- The company said that over 90% of its stores were profitable during the period
- Its revenues increased by £12m to £198.8m in the six months to 28 November
- Games Workshop is the creator behind the Warhammer franchise of miniatures
Fantasy miniatures retailer Games Workshop has reported another record sales performance despite falling online purchases and disruption to freight deliveries.
The company saw revenues grow by £12million on a constant currency basis to £198.8million in the six months to 28 November thanks to a 17 per cent jump in retail sales and a significant rise in the number of trade outlets that sell its products.
It said that over 90 per cent of its stores were profitable during the period, even with the challenges facing the retail sector, and that it was doing well in most of its markets except for Australia where Covid-19 restrictions forced its stores to shut.
Fantasy Boom: Games Workshop saw revenues grow to £198.8million in the six months thanks to a 17 per cent jump in retail sales Pictured: Thousand Sons vs Space Wolves game
At the same time, income from licensing more than doubled to £20.2million as the group approved the Warhammer brand for numerous computer games that are due to be launched next year, including Warhammer 40,000: Darktide and Lost Crusade.
But the firm suffered a slight decline in internet sales while it also had to push back the launch of its release schedule in Asia by ten weeks, due to issues with toy safety certification, and was forced to temporarily halt production at its Warhammer café store in Shanghai.
Games Workshop also blamed the UK’s exit from the European Union for incurring higher shipping and freight costs and product delays.
It also cited trouble hiring EU citizens for having double its regular vacancy rate.
In addition, there was a £2.9million rise in extra warehousing costs, and similar spend on salary hikes and boosting staffing numbers, many in relation to design and intellectual property.
These various problems sent its gross margin declining by six percentage points to 70 per cent and pre-tax profits falling by £3.4million to £88.2million.
Chief executive Kevin Rountree admitted that the business had ‘not delivered to our full potential’ because of these issues but still hailed the ‘fantastic’ effort by the company’s employees.
Major Battles: Games Workshop blamed the UK’s exit from the European Union for incurring higher shipping and freight costs and product delays, as well as trouble hiring EU citizens for having double the regular vacancy rate: Pictured: Warhammer: Age of Sigmar game
He added: ‘We will continue to try our best. In the period reported, we have delivered just that. We have proven once again that the Warhammer hobby creates exciting experiences and allows people around the world to come together and have some fun.
‘We continue to focus on making the best miniatures in the world and to document and deliver an exciting operational plan.’
Games Workshop shareholders were paid dividends of 115p per share during the period compared to 80p last year and also received a further £19.7million from the group last week.
Analysts at Peel Hunt have said the firm’s dividend payments exemplify the confidence it has in its performance and has upheld its Buy recommendation for the Nottingham-based retailer.
However, AJ Bell’s investment director Russ Mould said that despite the business trading in line with forecasts, ‘there may be some nervousness now that its second half isn’t sufficiently heroic to make up for a limp first half.’
He added: ‘Potentially more serious have been reports of fractures between Games Workshop and its devotees, linked to the launch of a subscription-based service and the aggressive protection of its intellectual property by pursuing YouTubers who have created Warhammer-inspired animations and stories.
‘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.’
The group’s shares remained virtually flat on Tuesday morning at £97.50 before ending the day a massive 10.9 per cent lower at £10.95, though their value remains far above where they were five years ago.
Pandemic drop: Games Workshop’s shares have fallen by around a sixth since the middle of last summer, though their value remains far above where they were five years ago