Games Workshop stomps ahead after new licence deals

Games Workshop, the maker of the Warhammer tabletop game, has declared a 35p final dividend after trading since January "continued well" with sales and profits ahead of last year.

The gaming retailer, which has 507 stores and produces millions of miniature warriors a year from its Nottinghamshire base, said it expected profit before tax for the year to 2 June will be roughly £80m, which would be a rise of 7% on the £74.6m the year before.

Revenues were likely to be above £250m said house broker Peel Hunt, with earnings per share of around 195p.

Performance has been boosted by royalties receivable coming in higher thanks to the signing of new licence agreements.

The final dividend, which will be paid on 31 May, takes the total payout for the year to 155p per share, up 23% on the prior year.

In the first half of the financial year, the company had reported revenue rose to 14% to £125.2m and pre-tax profit up 7% to £40.8m. Chief executive Kevin Rountree said at the time that gross margins and stock levels were being depressed by moves to complete a series of major investment projects, including a new factory in Nottingham, upgrades to warehousing capacity there and in Memphis, Tennessee.

Games Workshop shares stomped almost 10% higher to 3,639p in early trade on Friday, its highest since hitting an all-time high just above 4,000p in September.

Analysts at Peel Hunt said they expect to increase their 2020 sales forecast from £249m to £265m, PBT from £73m to £85m and EPS from 176.9p to 206p.

Analyst Russ Mould at AJ Bell said, “To the uninitiated the appeal of the fantasy miniatures and table-top war games sold by Games Workshop may be something of a mystery but it is hard to ignore the successful niche the company is ploughing."

He added: “In retail knowing your customer is key and this is an area in which Games Workshop excels. It is constantly looking to engage with its audience through a variety of different mediums.

“This underpins robust cash flow and resilient earnings and for as long as this hobby remains popular the company looks well positioned to benefit.”