Games Workshop forecasts further growth in revenue and profits

Warhammer creator Games Workshop Group is expecting to post another rise in earnings and sales when it publishes annual results next month.

The tabletop games designer anticipates reporting core revenue of ‘no less than’ £385million, £28million coming from royalties, and pre-tax profits of at least £155million for the year to 29 May.

This compares to revenue of £353million, £16.3million in royalties, and profits before tax of £151million in the preceding 12 months, which were considerable increases from the previous financial year.

It further announced that employees had been handed cash share payments worth £10million as a reward for their work, though this was a slight decline on last year.

Since the coronavirus pandemic started, the Nottingham-based company has seen trade surge to record levels as people have looked to occupy themselves while spending more time at home.

In its most recent half-year results, the firm recorded revenue of £191.5million against £148.4million in the equivalent period two years ago, thanks to solid growth in purchases online and sales to trade customers.

Alongside this, the company saw a boost in royalty income from licensing Warhammer for use in computer games that are set to launch this year, including Total War: Warhammer 3 and Lost Crusade.

Yet even before the pandemic, Games Workshop’s sales had been growing for many years following a set of changes engineered under the leadership of chief executive Kevin Rountree.

The group rebuilt its relationship with fans who had been alienated by the company’s obsession with protecting intellectual property.

This would sometimes involve the company’s lawyers sending letters to online fan forums accusing their members of breaching copyright.

More simplified games were also introduced, such as Blood Bowl, a fantasy miniature version of American football where teams of goblins, orcs, elves and other creatures fight to score as many ‘touchdowns’ as possible.

These measures came as interest in tabletop gaming was jumping in popularity, with turnout to the industry’s most recent annual convention – UK Games Expo – about 80 per cent higher than in 2016.

Yet the company has not just benefited from its products becoming more in demand; it lacks a major competitor and has fans willing to fork out large sums of money to build their Warhammer collection. 

During the last decade, Games Workshop shares experienced the second-largest increase in shareholder returns amongst FTSE 250 listed firms, with a rise of 2,630 per cent, according to research by investment platform AJ Bell.

Today, they were down 3.4 per cent to £61.95 during the early afternoon, meaning their value has plunged by about a third in the past six months.