Games Workshop LON:GAW, the FTSE250-listed, Nottingham-based tabletop games and miniatures retailer is proving that despite the economic climate Brits will still keep spending on their hobbies, which should give some cheer to angling suppliers, games developers and toy and games stocks like Mattel NASDAQ:MAT.
The company published its half-year results to 26th November 2023 today (9th January), and the owner of the Warhammer franchise has continued its strong performance, which – contrary to the rest of the economy – remained robust throughout the Coronavirus pandemic and as the economy came out of lockdown, strengthened, having won many new fans who took up the hobby on furlough.
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Kevin Rountree, Games Workshop’s CEO said in a statement this morning: “Games Workshop and the Warhammer hobby are in great shape. We continue to perform well during challenging economic times, delivering record group revenue, profit and dividends in the period. Morale is good at Games Workshop and our hobbyists are having fun too.”
Revenue, earnings and profit up
The company saw its revenue rise by 9.3% year-on-year to GBP247.7m, operating profit up 13% to GBP94.5m and profit before tax up by nearly 14% to GBP95.2m. The company also paid back dividends of 120p/share taking dividends declared so far in 2023/24 to GBP3.15/share compared to the GBP2.95/share the tabletop games manufacturer paid last year. Earnings per share were 216.9p compared to 202.4p in 2022.
The company markets its core products from its high-street stores, which have remained popular. There is little chance of Games Workshop stepping away from the high street unlike many retail names. Nevertheless, the company has been developing its online presence, with its online sales growing 6.8% y-o-y on a constant currency basis. The company’s main investment was GBP10.8m into a new online store, which the company seems satisfied with saying: “we don’t expect any significant additional investment in the years ahead.”
Games Workshop has also been investing in its warehousing facilities, developing a centralised East Midlands hub, to serve UK and European customers; acquiring robotics to streamline the picking process in North America, and; acquiring new sites in Australia – the company had to move out of its old warehouse as it couldn’t keep up with demand. The company said it had opened 14 stores over the period, including relocations, and is on track for 30 new stores by the end of the financial year.
Small screen adaptation
As reported, the most exciting news to come out of 2023 is that Warhammer Space Marines will be coming to a screen near you, as the Nottingham-based company signed a licencing deal with Amazon NASDAQ:AMZN at the end of last year that will see its IP adapted for television by the global streaming service. If the space marines manage to conquer the small screen, Games Workshop has additionally licenced its fantasy products for adaption.
The initial payment isn’t game-changing, with the up-front fee quite modest. But should the media gain traction, the revenues that Games Workshop could expect would be quite considerable, as well as the additional revenues garnered from finding new fans from the serialisation for its physical products.
Analyst, Jefferies has estimated that the company could earn USD1m per episode based on a budget of USD20m to USD30m and assuming a 10-part series, plus higher fees and bonuses in follow-on seasons.In a move that would make vampire count, Vlad von Carstein proud, Games Workshop has also resurrected some of its old school IP, bringing back its original Old World Warhammer system earlier this month, in a necromantic summons to gamers of the 1980s and 1990s. The new (but old) series will run alongside Games Workshop’s shinier, millennial, Age of Sigmar gaming system. The company expects a glut of more mature consumers to come back to the hobby.
The company opened trading today at 9,768.9p and has returned just over 7% over one-year and 52% over three years. Games Workshop has a market cap of GBP3.2bn and its shares have ranged between GBP8.31 and GBP11,85 over a 52-week period.
Games Workshop goes into 2024 in good shape and it could be a seminal year for the company and it wouldn’t be beyond the realms of fantasy to see the stock at GBP12 by the end of December.
