Shares in fantasy games and miniatures retailer Games Workshop (GAW) dropped 5% to £92.52 after the company said higher stock delivery costs, staff salary hikes and unfavorable foreign exchange rates impacted first half profit.

Management have built a reputation for under-promising and over-delivering, but it was always going to be tough to beat strong comparable numbers from 2020. Higher freight costs have also been widespread for much of this year.

The board estimates constant currency revenues for the six months to 28 November to be no less than £197 million compared with £186.8 million last year with growth driven by the trade and retail channels after retail stores were reopened.

However, cost inflation and unfavorable exchange rates are expected to lower core operating profit excluding royalty income by around £15 million. Excluding the extra costs, the company said the core business operating profit was ‘broadly in line with last year’s exceptional performance’.


One pleasing aspect for investors was the big jump in royalty payments from licensing deals with computer game companies which jumped to around £19 million from £8.7 million last year.

This means first half pre-tax profit is expected to be not less than £86 million, around 6% lower than the £91.6 million reported last year.

Investment director at AJ Bell Russ Mould commented: ‘A key attraction is Games Workshop’s intention to boost income from licensing its intellectual property for use in games, films and TV – hence why it has been taking a harsh stance on people using its assets without permission and payment.’

The shares have lost around a quarter of their value since early September partly on fears that the company might be alienating parts of its loyal fan base and damaging its reputation as Shares wrote about here.


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Issue Date: 08 Dec 2021