GW's Trading Update

So last evening GW posted a trading update covering the Financial Year ending 31 May 2015:

Following the close of its 2014/15 financial year Games Workshop provides the following trading highlights:

 

We expect the Group's profit for the year to 31 May 2015 to be broadly in line with market expectations.  

 

Over the year we have seen modest sales growth, at constant currency, in our core trade and mail order channels. We saw a small decline in our own stores due to continued difficult trading in Continental Europe following our restructuring last year. We saw expected declines in some non-core activities that are grouped with core activities in our reporting. The effect of these non-core activities and the continuing effects of unfavourable exchange rates mean that our reported sales are likely to show small declines in retail (c.5%) and trade (c.3%). Mail order growth was c.5%.

 

We will provide full and detailed information, including the effects of adverse exchange rates, at the time of our results announcement on 28 July 2015.

Let's look at this a bit more.

Over the period the USD strengthened versus the GBP but the GBP strengthened versus the EUR. Looking at last year's annual report, US sales 1.09x European sales so in reality the gain in one should balance the loss in the other. Methinks that they protest too much....or they are really shite at managing FX exposures.

They speak of the reported sales numbers. When again you look at the breakdown of sales last year (42% Retail, 36% Trade, 13% Mail Order, 9% FW/BL) then the sales drop they are foreshadowing equates to about 2.5% (or GBP 3.1 million on last year). Whichever way you cut it this doesn't look a great result.

Can't help thinking that "broadly in line with market expectations" is a nice way of saying expect continued sales and profit decline.

I'm concerned that they are pointing at exchange rates which when you look at the split in the last Annual Report should be broadly neutral.