Falling revenue at toy specialist Character (CCT) largely reflects poor demand for its third-party products - the slide in sales of its Zhu Zhu furry hamster toys, for example, equated to the overall net drop in sales during the period. Moreover, more clearance sales, a reduction on normal margin sales and retailers delaying stock intake, all helped the group gross margin fall by 1.7 percentage points year on year to 32.6 per cent.
The good news is that sales of own-branded toys such Peppa Pig, Fireman Sam and Scooby Do - which are aimed at the pre-school market - did well. Overall performance was also protected to some extent by a sharp cut in marketing expenditure, fewer early settlement discounts and an absence of directors' bonuses. But demand for AppGear, an internet application with an associated toy, fell well short of expectations. And short-term prospects aren't looking good, either. Last month Character warned that the current half year would be "disappointing" because October sales for Christmas "showed a steep decline" - although a better second half performance is anticipated.
Consequently, broker Charles Stanley forecasts break-even for 2013, with a profit recovery in 2014 with EPS of 21.59p. That said, the broker is expecting the fairly decent dividend to at least be maintained.
CHARACTER (CCT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 125p | MARKET VALUE: | £28.2m | |
| TOUCH: | 123-127p | 12-MONTH HIGH: | 161p | LOW: 123p |
| DIVIDEND YIELD: | 5.3% | PE RATIO: | 5 | |
| NET ASSET VALUE: | 44p | NET DEBT: | 79% | |
| Year to 31 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 82.3 | 5.14 | 12.0 | 2.20 |
| 2009 | 68.6 | -2.17 | -4.10 | 1.00 |
| 2010 | 85.2 | 7.55 | 20.1 | 4.00 |
| 2011 | 95.0 | 9.05 | 28.5 | 6.00 |
| 2012 | 75.0 | 7.08 | 25.6 | 6.60 |
| % change | -21 | -22 | -10 | +10 |
Ex-div: 16 Jan Payment: 1 Feb Aim: Personal & household goods | ||||
