Profit warning hits Games Workshop

[Krug]

http://uk.news.yahoo.com/050404/325/ffm89.html

LONDON (Reuters) - Games Workshop (LSE: GAW.L - news) has lost about a quarter of its market value after the battle games retailer warned on annual profits, blaming a slowdown in sales, especially in the UK and Europe.

The maker of fantasy figures for games based on Lord of the Rings said it was unlikely to achieve market estimates for sales of between 151 million pounds to 162 million for the year to May 29.

"The sales shortfall described above is likely to impact materially on the company's profits and earnings per share in the current year," the firm said in a statement on Monday.

Analysts had on average expected the company to post earnings per share of 46.14 pence, according to data from Reuters Estimates. Forecasts ranged from 43.34p to 47.53p.

Shares in the firm hit their lowest in nearly 22 months, falling 181 pence to 535p by mid-morning.

 

[Turjan]

You left out the following bit :

But the company added that the business remained highly profitable and cash generative, and its board intended to recommend a maintained final dividend of 14.025 pence per share for the full year.

 

[Frostmarrow]

They only gave 40k a facelift. I wonder how things would have been if they'd make a complete overhaul. Sure, the fans would have made quite some noise but perhaps the noise is vital to create the internet buzz. I mean it's better, fiscally speaking, if everybody has to buy everything new every five years or so, no matter what the customers have to say about it.

Otherwise it might just be LoTR wearing off.

 

[Turjan]

Don't forget that the free fall of the US dollar damaged the profit of most European companies with a large share of their customers in the US.

 

[Krug]

I'm sure the collectible (& much cheaper) miniatures game hasn't yet impacted it. Wonder how WH40K: Dawn of War did...

 

[teitan]

I think that the annual raise in prices that GW seems so fond of might also be starting to hit them below the belt. I have always wanted to try Warhammer but it seems that EVERYTIME I try to get the stuff prices have gone UP again. It was expensive to start with...

Jason

 

[The_Furious_Puffin]

yeah, I stopped playing to cause it's simply to expensive.

 

[Talvisota]

Overreaction in the markets, it seems. I am buying a few shares - it is a real cash generator, with a decend dividend payout ratio. They just had some very optimistic goals and didn't meet them. Performance otherwise is quite good.

I agree with the statement that the depreciating dollar is a major factor in their sales numbers.

Embarrassing, really; I am a financial analyst and I had no idea they were public! Just never thought about it.

 

[JVisgaitis]

Maybe people finally realize that $3 for a tiny jar of paint that's designed to dry up after a few months isn't a good deal. Not to mention how insanely the prices have soared through the roof in recent years. If RPG company prices rose as much as GW's, I think the market would have imploded. I got out of the hobby maybe 4 or 5 years ago. When I go to local stores and see the prices now, its enough to make me cry. Tickets for Gamesday are up from $10 when I went last to somewhere in the $40+ range. Utterly ridiculous. I hope their stock tanks and they loosen up a bit on the prices cuz they are utterly insane at this point. Maybe then I could go back to playing. . .

 

[Lars Porsenna]

GW prices too expensive for you? I tend to agree. I rarely buy GW product in the stores anymore (exception: I did buy a Bloodletter champ today, but I intend to paint him up and sell him on E-bay, just to see how good a painter I really am...). These days, most GW I buy is off the internet. I've bought bulk packs where each figure came in at around $1.50 per! As good as historicals (for the most part). You just have to be patient, dedicated, and wise enough to know when to let something go...

Damon.