Games Workshop shares dip amid rising costs despite strong sales and profit growth
Shares in Games Workshop, the renowned creator of Warhammer, fell by three per cent today following a warning from the company about the potential impact of rising costs on its operations. In its half-yearly financial report, the FTSE 100 giant disclosed a significant increase in profit before tax, which soared from £95.2m in the first half of the previous year to £126.8m, as reported by City AM. This performance was described as "comfortably ahead" of the firm's earlier guidance of £120m by analysts Charles Hall and Andrew Ford from Peel Hunt, prompting them to raise their full-year profit forecasts from £210m to £220m. Despite this positive outcome, concerns have been raised by investors regarding cost pressures that could affect the business, particularly in light of employer national insurance increases and the higher minimum wage introduced in the last Budget. Although Games Workshop has stated that it does not anticipate the policies from the Budget to materially affect its financial results this year, since it already pays its staff the living wage, there is still the possibility of "third party cost increases" in the coming year. "At this stage we have not been informed of any significant changes," the company commented. "We await confirmation on any other external tariffs or tax changes and we will manage them accordingly." Nevertheless, despite these concerns, analysts remain content with the company's performance, highlighting a 12 per cent surge in core sales during December alone. Russell Pointon, director of consumer at Edison Group, commented on Games Workshop's performance: "Whilst the core business put in a strong performance, growing by 16 per cent at constant currency, licensing revenue was the star performer with 160 per cent constant currency growth helped by the release of the Space Marine 2 video game," The company also announced a significant dividend increase, taking dividends to £4.20 per share, up from the £3.15 declared at the same stage last year. Pointon added: "It is clear that management continues to plan for growth in the medium term with planning permission secured for a fourth factory in Nottingham and the purchase of two further properties in the period," All three analysts who cover Games Workshop give a Buy rating to its stock, a rare full endorsement among FTSE 100 stocks.
Homeware retailer Dunelm reports solid trading results for golden quarter
Dunelm, the homewares retailer, has reported robust trading results that outperformed the broader retail market for the golden quarter. Despite this, investors remained sceptical, leading to a nearly four per cent drop in its share price in early trades, as reported by City AM. The Leicester-based business saw a 1.6 per cent growth in sales to £490m in the 13 weeks leading up to December 28, amidst what Dunelm described as a "challenging market". Sales in the first half of the year were at 2.4 per cent. While Dunelm expressed caution regarding the Autumn Budget's impact on the wage costs of its 11,500 employees, it also stated that productivity-boosting initiatives were in progress and it anticipated mitigating the upward pressure on costs in the medium term. "We’re pleased with our performance in the first half; we are growing sales and volume, with customers again responding well to the value and choice we offer across our ranges," said Chief Executive Nick Wilkinson. He added: "At the same time, we’ve made significant strategic progress across multiple initiatives which are helping us to improve our attractive, specialist offer and continue to gain market share." During the first half of the year, Dunelm acquired 13 stores in Ireland and opened its first inner London store in Westfield. "As we move into the second half of [the year], we have successfully launched our Winter Sale which is being well received by customers seeking amazing value across a wide choice of relevant products for the colder months." Despite facing a challenging environment, Dunelm chief Wilkinson, remains optimistic: "As we navigate this challenging environment, we see even more opportunities to harness our unique business model, raise the bar on our proposition and fulfil our ambitions as The Home of Homes." In the last year, Dunelm achieved a record revenue of £1.7bn, up 4.1 per cent from £1.64bn the previous year.
Asos to close US warehouse and serve customers from Barnsley instead
Online fashion retailer Asos has announced plans to shut down its distribution centre in Georgia, USA, as part of a strategy to enhance profitability and streamline operations. From late this year, the company will serve US customers from its automated UK fulfilment centre in Barnsley, alongside a "smaller, more flexible local US site." The Atlanta warehouse is set to close in the second half of the year and subsequently be sold, following a multi-year warehouse automation project. The company anticipates a £10m-20m boost to pre-tax earnings from 2026, despite a £190m impairment this year, as reported by City AM. Its share price saw a 1.7 per cent increase in early trades, although it has dropped by over 11 per cent since the beginning of the year. The seven directly affected Asos employees will be "offered alternative roles where feasible", while the company's logistics partners will strive to redeploy several hundred staff to nearby sites. Asos believes that this move will enhance the variety of clothes available to its US customers and reduce the total fulfilment cost per order. "Asos remains excited about the opportunity in the US market and believes that its new operating model will better serve its US customer-base, while generating a better return on investment," the company stated. This decision follows a similar move by Boohoo last year. Asos reported an operating loss of £331.9m for the year to 1 September, 2024, marking an increase in its year-on-year loss. In its latest financial results, Asos announced the completion of its lengthy restructuring process, stating that the "foundations of a more agile and profitable business are now in place." This included job cuts, inventory reductions, and streamlining operations. The company also refinanced hundreds of millions in debt and sold its stake in Topshop as part of a joint venture. José Antonio Ramos Calamonte, Asos's CEO, claimed the company is in "the strongest position it has been in years."
Superdrug sales surge in run-up to Christmas - with one particular item selling every second
Superdrug has celebrated its most successful Christmas trading period, with sales climbing over five per cent in the closing weeks of 2024. The high street chain attributed its success to robust sales, including a gift set sold every second during December. Popular Own Brand items were the Studio London Ultimate Brush Collection, Vitamin E Complete Daily Skincare Set, Extracts Body Bumper Pack, and Fruity Candyfloss Bumper Pack. Additionally, Superdrug's online sales saw a significant increase, rising by 21 per cent year on year, as reported by City AM. Looking ahead, Chief Executive Peter Macnab expressed optimism, stating: "We’re proud of these results and want to thank our customers for their continued loyalty to Superdrug as we continue our mission to be as accessible as possible when it comes to high-quality beauty and health." He also extended gratitude to staff, saying, "I’d also like to thank our colleagues for their efforts to make Superdrug the best place to shop this Christmas." Macnab further highlighted the company's future plans: "2025 will be an exciting year for us as we continue to enhance our in-store experience and invest in our Only At Superdrug product innovations and exclusives, to give customers reasons to keep returning to Superdrug." These festive season achievements follow a report from City AM in July, which detailed that Superdrug's profits soared past £100m in 2023, with sales exceeding the £1.5m mark and the creation of over 400 new jobs. According to the results filed with Companies House, Superdrug's pre-tax profit surged from £77.7m to £111.6m over 12 months, while its revenue increased from £1.3bn to £1.5bn. The average number of employees at Superdrug also rose from 13,430 to 13,845 during this period.
Booths hails record Christmas as ‘Waitrose of the North’ sees biggest ever single day sales
Northern supermarket giant Booths saw its biggest ever single sales day as it reported record Christmas week sales. The upmarket family-owned chain, known as the “Waitrose of the North”, said like-for-like retail sales rose 9.3% in the key three-week trading period ending Jan 4 – compared to an 8.3% uplift in 2023. It said Christmas week sales hit record levels and were up 6.7% on last year. Meanwhile, on December 23 it “recorded the biggest ever single day sales at Booths”. The Lancashire group said like-for-like sales at its butchers counters grew by 16% in December, while both fruit and veg sales were up more than 10%. Sales of Christmas cheese were up by 29%, while sales of single malt whiskeys from distilleries across the UK rose by more than 6%. Booths makes many Christmas specialties, including pigs in blankets, in-house at its Preston manufacturing sites. Pigs in blankets sales were up 14% on the previous Christmas. The group is also continuing to grow its Café 1847 concept, which is available in selected stores and opened in the Knutsford store in September 2024. Last month Booths saw sales pass £300m for the first time. It also slashed its pre-tax losses from £4 million to £1.5 million. Managing director Nigel Murray said, “Booths really does love Christmas, and this is reflected in our strong performance again this year. Customers trust us to provide the best quality and store experiences and we are delighted to deliver. “Our teams work year-round to develop delicious new products for our customers across Booths Country. " He added: “We strive to deliver the very best food and drink for our customers, and I pay credit to every colleague and supplier who, with their warm Northern welcome, share an infectious love of great food and drink. I would also like to thank our customers for their continued trust in Booths, they are an integral part of our Booths Country family.”
JD Sports shares plunge after retailer issues profit warning
Shares in JD Sports plummeted over 12 per cent this morning following a profit warning from the company. The FTSE 100 heavyweight now predicts full-year pre-tax profits to be between £915m and £935m, a significant drop from its previous forecast of £955m to £1.035bn. This morning, the Bury headquartered retail titan informed markets that sales had dipped by 1.5 per cent across November and December due to a "challenging and volatile market". Despite this, revenue saw a growth of 3.4 per cent during the same period, as reported by City AM. However, December's revenue increase of 1.5 per cent fell short of the British Retail Consortium’s market average of 3.2 per cent. JD Sports' CEO, Régis Schultz, commented that the company had performed well "considering the current... market". He added: "Market headwinds were higher than we anticipated and therefore our full year profit forecast is slightly below our previous guidance," and warned of a cautious approach to the new financial year due to expected continued trading conditions. Mamta Valechha, consumer discretionary analyst at Quilter Cheviot, noted that "while JD Sports has not called out any brand in particular, it is well understood that a significant amount of the company’s woes are related to Nike." She further explained: "In December, just before the Christmas break, Nike’s reporting saw it push its inflection point out for at least another two quarters, with the coming two quarters being clear out events. " "The supply of new franchises will be further constrained over the next few seasons, which we would expect to hinder top line momentum for JD Sports too. While Nike’s clearance is on its own digital channel, it has led to an environment where it is capturing and competing with its wholesale partners as opposed to creating and growing demand," Valechha said. Economic uncertainty has also dented consumer confidence, with many retailers reporting lower footfall and fewer big-ticket sales. According to data from accountancy and business advisory firm BDO, high street sales growth was stagnant at 0.1% in the final quarter of 2024 - a worrying sign for JD, whose stores typically outperform its online channel. "After a challenging year, this low level of growth is a real concern for the retail sector," said Sophie Michael, head of retail and wholesale at BDO. Danni Hewson, head of financial analysis at AJ Bell, noted that "consumers are worried about another round of anticipated price increases, and they’ve already demonstrated restraint." "The reality of a sluggish economy, impending labour cost increases, rising bond yields, and a volatile pound must all be factored in," Hewson added. Helen Dickinson, chief executive of the BRC, said the golden quarter "failed to give 2024 the send-off retailers were hoping for" after a tough autumn. Retailers are bracing for a £2.5 billion hike in their wage bills due to a rise in employers' national insurance contributions (NICs). JD Sports' chairman, Andrew Higginson, had cautioned last autumn that this change would spark "guaranteed inflation" and be "too much for industry to bear".