COVID-19 boosts Warhammer-maker Games Workshop's profit

Saleha Riaz
·2 min read
Credit: Warhammer
Underworlds: Shadespire game in progress. Credit: Warhammer

Games Workshop (GAW.L), best known for its Warhammer games, saw a surge in revenue and profit for the six months to 29 November 2020, as the games sector saw an increase in popularity thanks to people stuck at home during the coronavirus pandemic.

The company, which makes tabletop miniature wargames with a medieval fantasy theme, posted a revenue of £186.8m ($253m), up £38.4m year-on-year, while operating profit was $92m, up from £59.2m in the six months to 1 December 2019. Online sales were up a whopping 87%, while overall sales growth was up 26%.

CEO Kevin Rountree, described the results as “a solid six months building on the great progress and profitable growth we have been consistently delivering over the last five years.”

He said in a statement the company reported “record sales, profit levels and cash generation in the period.”

Rountree explained this was due to “a step change in unit sales of our Warhammer 40,000 miniatures across the world; our full range, including Age of Sigmar, has sold well too.”

Thousand Sons v. Spacewolves. Credit: Warhammer
Thousand Sons v. Spacewolves. Credit: Warhammer

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However, shares were down roughly 6% Tuesday morning as it still faces a number of challenges, like most retailers, amid the ongoing coronavirus pandemic:

Games Workshops's stock ticked lower despite posting a surge in profit. Chart: Yahoo Finance
Games Workshops's stock ticked lower Tuesday morning despite posting a surge in profit. Chart: Yahoo Finance

Ever since the coronavirus pandemic was established in March last year, the majority of its 529 retail stores have been restricted or closed. Social distancing measures at its factory sites and logistics hubs also led to “constrained capacity.”

The firm also pointed out that “retail remains a challenging environment. This channel was in decline in most countries broadly in line with government restrictions. If current sales trends were to continue for the full year we would have around 50 stores which would not break even.”

Games Workshop did not make claims for financial support or subsidies and is returning its business rates holiday money.

A report in the Financial Times pointed out in September, when Games Workshop’s shares had more than doubled over the past 12 months and the company had a £3.3bn market capitalisation, that “explosive growth and niche appeal make a volatile combination.”

The report said “investor demands are not easy to balance with those of a very particular band of customers and stakeholders. A valuation of more than 40 times 2021 earnings leaves little room for error.”

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