World Trade

Games Workshop and Hornby decline following unsatisfactory revisions

Games Workshop (LON: GAW) shares fell more than 5% at the start of trading on Tuesday, after the company that produces the Warhammer miniature wargame reported lower-than-expected quarterly results.

In the six months leading up to November, the company’s U.S. sales fell short of projections, remaining flat in constant currency terms. However, the dollar’s strength and the sterling’s weakening allowed the firm to report sales revenue of over £200 million (£1 = $1.2172) for the first time. It also declared a special dividend of £1.30 per share, in addition to the £1.65 per share already declared for the first half.

Operating profit in constant currency terms decreased by 14% to £75.7M due to increasing staff costs, particularly the need to hire more sales staff in Europe as a result of Brexit, which eroded profit margins. The company also said that COVID-19 lockdowns in China cost it about £1 million in sales and that the invasion of Ukraine in Russia cost it another £2 million in sales.

“Games Workshop and the Warhammer hobby are in terrific form,” claimed CEO Kevin Rountree, but the market opted to focus on the group’s admission that its new web store, a major route for increasing sales in the United States and other markets, continues to encounter delays. Rountree stated that the organisation has “tentatively” scheduled a launch for the middle of 2023.

At the outset, Games Workshop shares plunged as much as 6.8% to its lowest level of the year, before leveling off to trade down 4.6% by 03:45 ET (08:45 GMT).

While this is a slight pullback for the stock following a 63% climb from its October low, one of the U.K.’s other hobby and leisure firms received worse news.

The shares of model railroad manufacturer Hornby (LON:HRN) plummeted 20% after the company reported that sales during the crucial Christmas quarter fell short of its own estimates. The company attributed the shortfall to “the tough consumer economic backdrop.” It cautioned that this would also have an impact on its full-year results, without providing specifics.

One bright area for Hornby was its direct-to-consumer sales, which increased by 44% compared to the previous year.

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