Don’t call it a come back, Games Workshop has been here for years. Things are turning around for GW as they just reported higher profits for their first half of 2016!
The manufacturer from Nottingham, just released their Half Year Report this morning, showing gains of nearly 50% in key areas and addressing investors in a very optimistic and upbeat tone:
Reported sales grew by 28% to £70.9 million for the period. On a constant currency basis, sales were up by 13% from £55.3 million to £62.7 million; split by channel this comprised: retail £25.8 million (2015: £21.5 million), trade £24.9 million (2015: £22.4 million) and mail order £12.0 million (2015: £11.4 million).
All key territories achieved growth. In the period, our net number of trade outlets increased by 60 accounts.
Sales in our online shops were up 8%. Our ‘Made to Order’ and ‘Last Chance to Buy’ web store initiatives, aimed at ensuring our customers have access to our broader range, have performed well.
Operating profit before royalty income increased by £5.0 million to £9.7 million (2015: £4.7 million) before the change in accounting estimates described below. On a constant currency basis, operating profit before the change in accounting estimates increased by £2.0 million to £6.7 million.
Total operating profit increased by £7.6 million to £13.8 million (2015: £6.2 million). The net impact in the six months to 27 November 2016 of exchange rate fluctuations was a gain of £3.5 million. It is not the Group’s policy to hedge against foreign exchange rate exposure. Operating expenses increased by £5.3 million due to an investment in sales facing activities relating to new retail store costs. Costs remain a key area of focus.
In the period we paid a dividend of 25 pence per share (2015: 20 pence) amounting to £8.0 million (2015: £6.4 million).
In closing Kevin Roundtree had the following to say which, mirrors his 2015 report very closely:
The greatest risk is the same one that we repeat each year, namely, management. So long as we have great people we will be fine. Problems will arise if the board allows egos and private agendas to rule. I will do my utmost to ensure that this does not happen.
Now I am not a financial analyst but I can spot a trend or two, and it is no surprise to me to see royalties income will be up even though they are splitting with FFG. With games like Total War: Warhammer, Deathwing, BFG: Armada and more there has been no slowdown to properties bearing GW’s IP in 2016.
As far as profits being up over the previous year I think we can all agree the middle to ladder part of 2015 was a dark time for the hobby, but the company as a whole has started to rise like the proverbial Phoenix, hopefully to take flight again in 2017!
I for well welcome our new hobby over lords in 2017, and I hope you do as well!
Stock Price is up over 200£ from this time last year
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