Games Workshop defiant after profits blow

Fantasy war games retailer Games Workshop today said the hobby was in “good health” despite reporting a 73% drop in pre-tax profits.

The company, which has 119 stores in the UK, recorded a fall to £3.7m (€5.4m) for the year to May 28 – down from £13.9m (€20.3m) – while revenues slumped from £136.6m (€200m) to £115.2m (€169m).

The Nottingham-based company said it experienced a hangover following a rapid sales upturn between 2002 and 2004, as well as a decline in sales to independent toy and hobby retailers as many small shops closed down.

Games Workshop fired out a profits warning in January after interest in model versions of Lord of the Rings characters – one of the shop’s mainstays – started to wane after strong sales previously.

However, chairman and chief executive Tom Kirby said the company was poised to take steps forward.

He said: “Despite the short-term difficulties of this year, we remain confident that the hobby is in good health.

“In addition, we have come to the end of our investment programme, which leaves the business seriously well invested. The directors believe the prospects remain very good.”

Games Workshop spent time “re-training” and “re-invigorating” staff in the basics of customer service, as well as improving efficiency at its manufacturing plants in Nottingham and Memphis.

The company has decided to maintain its dividend for a second year at 14.025p a share.

Charles Hall, an analyst at Panmure Gordon stockbrokers, said: “Full year numbers are better than expected and there are clear signs of an improvement in performance.”

Mr Hall said sales were lower than his forecast of £117m (€172m), but added there should be better news later in the year with the autumn release of new products and key changes to internet strategy.

Games Workshop was established more than 30 years ago by gaming enthusiasts from London. It now operates through more than 300 hobby centres and 4,000 toy shops around the world, including in the UK, US, Canada, France and Germany. The majority of models are made in Nottingham and Memphis.

Last year the company spent £500,000 (€730,000) opening its first store in Japan, with another shop in the pipeline, while two new outlets were opened in the US and Canada.

In September, the company welcomed 10,000 people to its annual games day, which was held for the first time at the National Exhibition Centre in Birmingham.