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Games Workshop reports first half boost to sales and engagement, but profits fall as costs rise

Warhammer fans are engaging on its community

Games Workshop today reports continued strong interest in its Warhammer game as sales and engagement grew. But profits fell as costs increased. 

The gaming retailer is planning a £6m upgrade to its web store after a half-year in which online sales fell by 10%. The retailer wants to ensure its Warhammer game products are better available to customers, while investing in support functions to boost on time deliveries. It also says that global disruptions have affected its operations in ways that may persist for several months. 

The update came as Games Workshop today reported revenue of £191.5m in the six months to November 28 2021, up 2.5% from £186.8m a year earlier. Pre-tax profits of £88.2m were 3.7% down from £91.6m last time, as the cost of distribution, staffing and wages increased, while foreign exchange movement also hit the bottom line. 

Trade sales continue to be the largest part of the Games Workshop business, with sales of £108.1m up 3.9% from £104m last time, followed by retail sales (+13.5% to £41.9m) and online (-9.6% to £41.5m). More than 20% of Games Workshop sales take place online through its own website, while shoppers also buy its goods online from the independent retailers that it supplies. 

During the retailer engaged with customers and fans on its Warhammer community – where users rose 15% – on social channels, via email, and on its new Warhammer+ subscription channel, which saw 2m views for content including animations and in-house shows. 

Games Workshop chief executive Kevin Rountree says: “We have proven once again that the Warhammer hobby creates exciting experiences and allows people around the world to come together and have some fun. We continue to focus on making the best miniatures in the world and to document and deliver an exciting operational plan.”

Operations and logistics challenges

The retailer says that post-Brexit trade rules cost it an extra £2m in shipping and freight costs in the half-year, compared to the previous year. It is running at a 20% job vacancy rate, and says recruiting and retaining EU nationals in the UK has not been easy. Warehousing costs grew by £2.8m to £9.7m as it put new technology into both its North America and East Midland Gate sites. Delays at Memphis project – caused by factors including Covid-19 restrictions that meant the UK project team was not able to travel to the site – resulted in back orders of £5m by the end of November 2021 but that is now expected to be cleared early this month after new systems were put in place. 

During the half-year, the retailer closed eight shops and opened four, taking it to a total of 519, of which 34 are not profitable. The retailer says that some stores, including its Warhammer World shop at its Nottingham headquarters, are now trading at pre-Covid levels, but it aims to return to face-to-face sessions in the second half of the year.  Stores in the Australia market are still closed under Covid-19 restrictions. 

Games Workshop is a Top500 retailer in RXUK Top500 research.

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