Fantasy miniature wargames manufacturer Games Workshop (GAW) reported a stronger than expected recovery since re-opening operations, giving the shares a 10% boost to £78, trading within a whisker of the all-time high.

BIG UPGRADES TO COME

Today’s announcement is quite extraordinary given current limited manufacturing capacity and that around 43% of retail stores are still closed around the globe.

The company now expects to report revenues of around £270m for the year-ended 31 May 2020, around 3% higher than consensus analysts’ expectations. Games Workshop also said pre-tax profits will be at least £85m, some 21% higher than the £70m it guided to in late April.

It seemed at the time that analysts would need to downgrade their expectations because they were expecting profits of £76m, but instead over the last six weeks the consensus has moved up to £79m.

Russ Mould, investment director at AJ Bell commented, ‘there have been growing fears that analysts have been over-optimistic with revised earnings forecasts for companies which could lead to a second wave of downgrades as reality shows that recovery efforts are slow. Games Workshop is the opposite as its guidance for pre-tax profit to be 21% higher than previously expected will cause analysts to upwardly revise their estimates.’

He added, ‘the miniature figures specialist has a very loyal customer base and its products are ideally suited to a lockdown environment. A lot of people take great pleasure painting dragons and warlords as well as playing board games which involve such activities as aerial combat in the 41st millennium. All these activities can be done from the comfort of one’s own home.’

COMING OFF GOVERNMENT SUPPORT

Having taken advantage of government subsidies during lockdown, the firm does not intend to make further claims in light of the strength in recent trading. Period end cash is expected to be around £80m and as previously announced it has also secured a £25m overdraft facility.

The company has once again shown its mastery in the art of communication and proved that under-promising and over-delivering is still alive and well.

READ MORE ABOUT GAMES WORKSHOP HERE

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Issue Date: 12 Jun 2020