Warhammered

Thursday, May 03, 2007 | | 0 comments »


Games Workshop plc notes, 5 Jan ‘07: Not convinced by eps estimates. Sales (4%) at the half. Divi levels imprudent, outlook overly optimistic, Kirby trading some credibility. Fad vs hobby debate gathers pace.

The Warhammer Giant by Games Workshop. Now available for hire as a Dog of War, if you've the cash

Games Workshop plc, an interesting retailer of some previous strength warned today not, surprisingly for retail bears, on the back of UK performance but on that of Germany and France. A cost reduction programme is to be implemented (itself costing £6m this year). The shares closed yesterday at 327p and currently trade at 255p having briefly lost 44% of their value (at 180p) this am.
Games Workshop have now abandoned the final dividend which, if paid, would have caused a cash outflow of circa £4.3m. Cash and equivalents were £(2.7)m at the half reported back in January which, in a world of common sense, should have seen the company slash the even then fractionally covered dividend until further notice. But good intentions brought delay (the interim divi was paid).
Give Chairman Kirby his due. In November he put his money where his optimism (and some of his credibility) was and laid out £497,000 to bring his holding to 6.6%. That said, another board member made a sale of £2.6m of shares (then 350p) on 12 April. But given this was a non-exec perhaps it should be judged more fortuitous than informed. But it does look bad.
The outlook demands not simply that the board be as operationally firm and hard as some of the characters in its products. It also needs to be timely.

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