Shares in Games Workshop Group PLC (LON:GAW) took a (war) hammering after the tabletop wargaming company issued an enigmatically downbeat trading statement.
The board said that it “remains aware that there are some uncertainties in the trading periods ahead for the rest of the 2018/19 financial year”.
READ: Games Workshop's shares slide despite record-breaking year
The statement did not give any details regarding what the uncertainties might be. The use of the phrase “remains aware” indicates that the board has been concerned about these uncertainties for some time but if that is the case it is hard to find any mention of them in recent trading updates.
Games Workshop's shares have risen by 660% in two years, making it the most successful firm in the FTSE 250 share index https://t.co/zWSVupB9Tu
— The Economist (@TheEconomist) October 10, 2018
Perhaps Christmas has been cancelled ...
On the plus side, trading in the last couple of months has “continued well” with sales ahead of the same period of last year while profits are at a similar level.
“Shareholders can easily get carried away with stocks that are going through a purple patch with sales growth and Games Workshop certainly is among this pack. Sadly the retailer’s latest trading update is a reminder that no company is invincible,” said Russ Mould, the investment director at AJ Bell.
“The market rarely likes brevity and it hates uncertainty, hence why the retailer’s shares have taken a hit on the news. It is better to spell out the issues rather than keep investors guessing.
“Analysts have been saying for a while that profit growth would be challenging this year due to lower gross margins and higher operating costs (linked to new openings, investment and higher wages),” Mould added.
The sale of shares by former boss Tom Kirby looks well-timed
The worrying update comes three weeks after former Games Workshop boss, Tom Kirby, netted £20.3mln through the sale of shares.
Kirby sold the shares after they had risen from 2,543p at the beginning of the year to 3,785p at the end of September.
Mould suspects this was just a case of Kirby taking profits after the shares had gone moon-bound rather than a case of insider dealing.
Given that he retired more than a year ago, Kirby “shouldn’t be privy to information regarding the day-to-day running of the business.”
How to scare your investors with the briefest, most tantalising of updates. Games Workshop shares down 8.5pc on nebulous warning of "uncertainties". Don't leave us hanging, man! https://t.co/L8pTEe5jGf pic.twitter.com/eeLEnXbI4Q
— Jon Yeomans (@JonLYeomans) October 18, 2018