Games Workshop recovery since re-opening 'better than expected'

(Sharecast News) - Miniature wargames manufacturer Games Workshop said on Friday that its recovery since re-opening has been better than expected and that full-year profit and sales are set to be ahead of 2019.
The company now expects sales and pre-tax profit for the year to the end of May 2020 to be around £270m and no less than £85m, respectively. This includes royalties receivable from licensing which are estimated at about £16m.

Independent retail analyst Nick Bubb said: "The company has not spelt it out, but that is an improvement on the £256m sales and £81m profit before tax in the previous year, helped by strong licensing income."

As at the end of May, the cash balance was approximately £50m and Games Workshop has put in place a £25m overdraft facility.

The group said it does not plan to claim anymore cash from the government and will repay any amounts that have already been received, where possible.

Having closed due to the coronavirus pandemic, the company's warehouses are now operational and its factory is working in a limited capacity, complying with social distancing and hygiene requirements. As far as stores are concerned, 306 out of 532 are now open in 20 countries and more will re-open across the world as local restrictions are lifted.

"In relation to the future performance of the group, the board feels that it is too early to know what the continuing impact of Covid-19 is likely to be," it said.

Russ Mould, investment director at AJ Bell, said: "A lot of people will have wished they could escape 2020 given the horrors of coronavirus that the real world is having to navigate. It therefore isn't a surprise that Games Workshop's recent sales have been better than expected.

"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.

"However, a lot of Games Workshop's success is also down to its stores which act as games hubs rather than simply be a unit with shelves full of products. People like to visit the stores because its staff also tend to be fantasy fanatics, so customer engagement levels are high. Thus Games Workshop will be eager to get its remaining 226 stores open as soon as possible, representing 42% of its estate."

At 1300 BST, the shares were up 9.5% at 7,775p.