Games Workshop powers through Covid-19

Games Workshop sells its products via three channels – retail, trade and online. The retail segment – which accounted for more than a quarter of sales last year – was squeezed by pandemic disruption with revenue falling by 12 per cent at constant currencies to £78m. While the group opened net 14 new stores during the year, new store launches have been paused.

By contrast, sales to third-party trade outlets increased by 14 per cent at constant currencies to £140m, equivalent to just over half of total revenue. The trade channel has proved more defensive than the retail segment, as many independent stockists also have online stores. Games Workshop’s own website sales rose by 9 per cent to £52m and it is seeking to “stay on the front foot” here to account for changing consumer habits.  

Royalties from licensing out its intellectual property (IP) have continued to grow. Operating profit from royalties jumped by over two-fifths last year to £15m, on a 90 per cent margin. Further momentum will likely come following a deal with Frontier Developments (FDEV) for a videogame due for release in 2023 and an agreement with Marvel to publish comics. A television series based on its Eisenhorn novels is also in the pipeline and royalties could be turbocharged if a major streaming platform signs up to be the broadcaster.

With no long or short-term borrowings since 2009, Games Workshop finished the year with £53m of cash (excluding lease liabilities), up from £29m a year earlier. In line with its policy of only handing shareholders “truly surplus cash”, the group has declared a final dividend of 30p. Moving forward, this ‘surplus’ will come after setting aside a three-month working capital “buffer” to protect against tougher conditions.

House broker Peel Hunt forecasts adjusted pre-tax profit of £85m and EPS of 205p in 2021, rising to £95m and 228p the following year.