Although sales declined in constant currency terms, profits and cash flow were up for Games Workshop, which reported its financial performance for the six-month period ending November 29th, 2009.  The vertically-integrated Games Workshop was able to improve its gross margin through productivity gains in the manufacturing process and better purchasing while keeping overhead costs down at retail by addressing unprofitable stores, reducing staffing and relocating to lower rent locations when appropriate.

During the period Games Workshop opened 29 “Hobby Centres,” most of which are in the new “one man” format, which is designed to be profitable even at modest sales levels.

Sales in North America declined (in constant currency) from 13.9 million pounds to 13.6 million pounds, a drop of 2.2%.  Sales in Continental Europe fell by 14%, while Northern European sales remained nearly constant year-over-year.  Sales in smaller territories including Australia were up by 4.5%, a percentage increase that was nearly matched in “emerging markets and Japan,” but that was not enough to match the declines in the bigger territories.

Since November of 2008 the pound sterling has declined 8.4% against the dollar and 10.1% against the Euro, which means that even though Games Workshop’s sales for the period ending last November were slightly higher (62.5 million pounds) than during the six-month period a year earlier (61.2 million pounds), sales were actually down when adjusted for the decline in the value of the pound (i.e. in “constant currency”).