Sometimes less isn’t more and that’s particularly the case when it comes to updating the market on trading.

Today’s update from fantasy miniatures expert Games Workshop (GAW:AIM) is extremely brief but looks at least like investors are being softened up for a profit warning down the road.

It’s worth outlining in full given its brevity:

‘Following on from the group's update in September, trading to 7 October 2018 has continued well.  Compared to the same period in the prior year, sales are ahead and profits are at a similar level to the prior year.

‘However, the board remains aware that there are some uncertainties in the trading periods ahead for the rest of the 2018/19 financial year.  A further update will be given as appropriate.’

With highly-rated growth stocks out of fashion, Games Workshop had already dropped around 20% from the record highs marked in September and it is down a further 9.5% to £30.15 this morning.


AJ Bell investment director Russ Mould comments: ‘Shareholders can easily get carried away with stocks that are going through a purple patch with sales growth and Games Workshop certainly is among this pack. Sadly the retailer’s latest trading update is a reminder that no company is invincible.

‘A very shortly worded update paints a dark picture for the future with talk of ‘uncertainties’, despite saying trading has been good in the past four weeks. A lack of detail is surprising given Games Workshop has developed a reputation for being a very clear communicator in its results.

‘The market rarely likes brevity and it hates uncertainty, hence why the retailer’s shares have taken a hit on the news. It is better to spell out the issues rather than keep investors guessing.

‘Analysts have been saying for a while that profit growth would be challenging this year due to lower gross margins and higher operating costs (linked to new openings, investment and higher wages).’

Mould says the update may raise questions over the timing of ex-chair Tom Kirby’s £20.3m share sale in September. Though he concedes Kirby should not have been privy to the day-to-day performance of the business given he retired more than 12 months ago.

Issue Date: 18 Oct 2018