Games Workshop’s Share Price Drops 4% Following Half-Year Update

Games Workshop’s share price fell 4% on Tuesday as it reported slightly-disappointing sales in the first half.

Revenues at the fantasy wargaming specialist rose to all-time highs of £226.6m during the 26 weeks to 27 November. This was up 7% from the same 2021 period.

Core revenues — which covers sales of its miniatures, paints, brushes and other wargaming materials — increased 11% year on year to £212.3m. But licencing revenues slumped 29% to £14.3m due to lower levels of guaranteed income on multi-year contracts.

Pre-tax profits at the Warhammer creator dropped 5% year on year to £83.6m on the back of increased costs. Cost of sales rose £15.8m from a year earlier.

But cash generation remained solid and Games Workshop ended the first half with £68.1m of cash on the balance sheet. It has paid total dividends of 295p in the financial year to date, up from 165p previously.

“In Great Shape”

Chief executive Kevin Rountree commented that “Games Workshop and the Warhammer hobby are in great shape,” noting that the first half was “another rewarding and successful period for the global team.”

He added that “we will continue to focus on making the best miniatures in the world, sign new licensing contracts with partners to exploit our IP outside of our core business and support our staff.”

Games Workshop didn’t sign any new deals in the first half to licence its unique product. But it grabbed headlines in December when it signed an agreement in principle with AmazonAMZN
to create a series of movie and television productions, starting with its flagshop Warhammer 40,000 tabletop system.

Expansion Problems

Games Workshop praised the “great recovery” its operations in the UK, Australia and Canada had enjoyed in the first half.

However, it added that “we set ourselves a higher sales growth goal,” and that whilst it reported record first-half sales it noted that “it isn’t where we wanted to be [and] particularly in the US, which was flat, at constant currency, against a record year last year.”

The company opened 119 new stores in the US in the first half.

Games Workshop said that “our current level of global sales is relatively new to us, so we are rapidly changing and learning as we go: managing and forecasting new release products for our broad range, at our highest ever volumes, is a reasonable challenge.”

In particular, the FTSE 250 company said that problems in integrating its new IT systems have hampered recent performances. The rollout of its new webstore has been delayed and the company now hopes for it to be launched in summer 2023.

Royston Wild owns shares in Games Workshop.