After a profit warning earlier this month, the market wasn't expecting too much from Games Workshop's results. However, what was somewhat surprising was the company's admission that the damage that led to the warning was at least partly self-inflicted.
The hobby specialist said that "staffing changes" in hobby centres designed to reduce overheads had led to sales shortfalls in its northern European and North American retail businesses. However, it pointed out that the Continental European business was in growth in the period after a similar shift to one man stores was completed last year, and was confident that other regions would return to underlying growth in 2012.
Games Workshop also said that sales to independent retailers were growing, and the consolidation of its manufacturing operations at its Nottingham factory is improving gross margins, which rose by 2.3 percentage points to 76.7 per cent in spite of rising raw material costs.
Broker Peel Hunt expects underlying pre-tax profits of £12m and EPS of 26.6p (from £16.1m and 48.1p in 2010).
GAMES WORKSHOP GROUP (GAW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 348p | MARKET VALUE: | £108m | |
| TOUCH: | 345-350p | 12-MONTH HIGH: | 450p | LOW: 332p |
| DIVIDEND YIELD: | 7.2% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 166p | NET CASH: | £11.5m | |
| Half-year to 28 Nov | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 62.5 | 7.9 | 21.5 | nil |
| 2010 | 60.0 | 6.7 | 15.3 | nil |
| % change | -4 | -15 | -29 | - |
