Games Workshop Shares Slide As Pre-Tax Profit Falls

Games Workshop (LON: GAW) shares have slumped more than 5% Tuesday after it posted its half-yearly results for the 26-week period to November 27, 2022, revealing a decline in interim profits.

GAW shares are trading around the 8,610p mark at the time of writing. 

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The company said revenue for the period came in at £226.6 million, up from £211.6 million during the same period last year. However, pre-tax profit fell to £83.6 million from £88.2 million. Operating profit was £83.6 million, down from £88.5 million.

The slide in profits came as licensing revenue fell to £14.3 million from £20.1 million, resulting in licensing operating profit coming in at £12.9 million from £18.8 million.

The manufacturer of miniature wargames said it delivered “another record half-year sales performance led by a great recovery in all channels in Australia, Canada, and the UK.”

It added that while its global online sales in constant currency have declined slightly, in line with its forecasts, its core engagement online metrics continue to grow.

“We set ourselves a higher sales growth goal, so whilst this is a record number, it isn’t where we wanted to be, particularly in the US, which was flat, at constant currency, against a record year last year,” GAW continued. “We are working as a senior team to improve our joined-up plan in the US.”

Meanwhile, the company revealed that its global projects continue to be delayed, with challenges in integrating new IT systems when it is still heavily reliant on its legacy IT systems.

Furthermore, GAW continues to face external cost pressures, and although its “operating costs have been managed exceptionally well” and are in line with internal targets, its core gross margin at actual rates is down 4.3%.

Games Workshop declared a dividend of £1.30 per share to be paid on February 24. Including this dividend, GAW’s total dividends declared in the year so far are £2.95 per share.