The Games Workshop share price gained 10.9% last night, taking the value of the fantasy roleplay company to above £3 billion for the first time. The latest share price surge for a company whose value has grown by almost 2000% in 4 years, and over 50% since the beginning of 2020, came after the company reported record sales over the financial year to the end of May.
Despite the company saying six weeks of sales and profits were lost as a result of stores being closed over the height of the Covid-19 pandemic lockdown, like-for-like sales over the year were up 5% to £269.7 million. Growth in pre-tax profits was even more impressive at 9%, with the total figure coming in at £89.4 million.
The 10.9% leap in the company’s share price sees its value now stand at £3.06 billion. That makes Games Workshop now three times more valuable than Marks and Spencer. The company sells miniatures of fantasy soldiers for the Warhammer board games series, as well as the board games themselves and various other licensed products, including Lord of the Rings games and miniatures.
Games Workshop was founded in 1976 by three friends who made and sold their own wooden board games. It first store was opened in Hammersmith, London, in 1978 after the company secured the European rights to the cult role-playing game (RPG) Dungeons & Dragons.
Warhammer, the RPG created in 1983, is now the mainstay of the Games Workshop business and the company has expanded to 529 shops in 23 countries. Around 75% of sales are now generated internationally and e-commerce is playing an increasingly important role. Online sales now account for around 20% of revenues and grew by 9% last year.
Games Workshop investors will benefit from the impressive results to the tune of a 145p dividend that adds up to a total payout worth £47.3 million. It could have been more but the company has opted for financial prudence in light of the current uncertain environment. A cash buffer of three months of working capital was set aside, with the remaining cash surplus assigned to investors.
Explaining the decision and Game Workshop’s overall strategy, chief executive Kevin Rountree stated:
“You can once again see from these results that our business and the Warhammer hobby are in good shape. We believe shareholder value is created, primarily, by not destroying it. We have no intention to acquire other companies, nor to dispose of any of those we own.”
He described the year’s results as “amazing”, given that the business had to contend with the unexpected disruption caused by the coronavirus pandemic. But he is confident that the company’s finances are in robust shape but shared plans to further fortify the balance sheet:
“How naive was I to say last year, ‘I do not see anything significant that will get in the way?’
“I will ensure our operational plan is even more robust. We will continue to deliver on that plan and at the same time invest in potential sales growth. Our recovery plan is going well, but we are not taking anything for granted. We will not hesitate to close our operations again to protect our staff, their families and our customers.”
One new direction currently being considered is selling the rights of the Warhammer franchise for television production. Updating on progress there, Mr Rountree wrote in the annual report:
“We have made some progress, as expected it is a little slower than I’d like — hey ho.”
A new edition of the Warhammer 40,000 board game series was announced during lockdown, with an online even streamed and watched over 2 million times. The Warhammer community website has over 6 million registered members.
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