Games Workshop shares dipped on Tuesday after the table-top gaming company said their profit in the six months to 27 November 2022 dropped as a result of external cost pressures.
Despite the drop in profit, Games Workshop achieved record sales in the period of £226m.
“Another rewarding and successful period for the global team with core sales for the six months of over £200 million for the first time,” said Kevin Rountree, CEO of Games Workshop.
External cost pressures put pressure on margins with Brexit costs and the ongoing impact of COVID-19 causing gross margin compression of 4.5% to 64.1%. The company said they now saw Brexit costs as an ongoing cost of doing business.
“First half results for Games Workshop reveal some growing pains for the business. The company has admitted the level of global sales achieved in recent times is a new development and inevitably that creates challenges,” said AJ Bell investment director Russ Mould.
“In many ways it is a positive that management are willing to be so open about the need to learn and improve the way its range of brands and new releases are brought to market. An upgrade to its IT systems is also taking longer and costing more than it previously expected. It is crucial that it gets the basics like this in place if it is to thrive as a global business.”
The Warhammer operator added 20 new jobs in the period as the company prepares for increased demand in the future.
Licensing revenue did fall in the period as a result a recording revenue when a deal was signed, but investors will look forward to further news on potentially lucrative deal with Amazon Studios. In December last year, Games Workshop said they were exploring opportunities with the streaming company but didn’t comment further in today’s update.
Games Workshop have a generous dividend policy and are increasing their payout to 295p per share, up from 165p in the year prior.