Games Workshop warns on profits as the magic falters

Toy retailer Games Workshop has sent out a warning that its profits may fall below market expectations for the current financial year. The retailer said that expectations of£151 million to£162 million in sales for the twelve months to May 29 2005 will not be reached, although the sales will not fall below the£129 million for the financial year 2003.

Games Workshop's interim results released on January 25 showed a slowdown in sales growth compared to recent years. It said the bubble effect in 2003 and 2004 could not be sustained. The retailer said trading had been difficult since the interim statement, with sales in the five week period including Easter bank holiday being well below budget. However, the retailer pledged to focus on maximising operation efficiencies so that the slowdown in sales will be offset by higher gross margins.

The retailer said: 'In spite of this, the sales shortfall described above is likely to impact materially on the company's profits and earnings per share in the current year.'