Games Workshop, Lowering Prices, Appears To Recover

Financial analysts are happy with the latest Games Workshop financial results. Half year financials looked fine, Harriet Russell from the Financial Times wrote (January 13, 2017):

If you’re trying to explain the sudden spike in Games Workshop’s share price towards the end of last year, you needn’t look past the devaluation of sterling. Almost three-quarters of the company’s sales are generated overseas, making it a significant beneficiary of the current weakness in the pound (…) 

Management initiatives are certainly starting to pay off. Of particular note was the growth in retail sales — up 20 per cent at constant currencies to £25.8m — given that this division has been struggling for some time. That channel is now showing growth across all territories, but particularly in the US as management have used some of the translational benefit to reduce prices, a move which has in turn encouraged volumes. During the first half, the group opened 17 stores and closed eight, leaving the current store estate at 460.

The trade division is also doing well, with 60 new accounts added during the first half, while mail order sales also rose 8 per cent. Finally, the amount of royalties Games Workshop receives in relation to its licensed business also rose from £1.5m to £3.3m. Analysts at Peel Hunt still expect pre-tax profits of £24m for the year to May 2017, giving earnings per share of 57.9p, compared with £16.9m and 41.9p in full-year 2016.

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