Games Workshop reported sharply lower half-year sales for its half year ending November 27, 2005, attributing the decline to the continued drop-off in sales of Lord of the Rings products (see 'Games Workshop Sales, Profits Decline') worldwide. 

The attrition of hobby stores in the U.S. also hit Games Workshop sales.  'The position has been exacerbated by the continued reduction in our sales to independent toy and hobby retailers, notably in the US, where many smaller independent operators are ceasing to trade,' the Chairman's Statement introducing the report said.  'We have sought to mitigate the impact of these difficult conditions by working closely with stronger outlets to nurse them through their current problems and by generating healthier performances from our own Hobby stores.'  

Games Workshop's shift in channel to its own stores is a long-term strategy that continues apace.  'We are strengthening all direct channels to market,' the Statement said.  The company opened nine new stores in this six month period.

The company's margins held, despite lower production volumes, and overhead was reduced, keeping the company profitable, although at a sliver of the year-ago numbers.  Pre-tax profits in this six-month period were around 100,000 pounds, compared to 7.7 million pounds a year ago. 

Operating profits in its two smallest regions (Americas and Asia/Pacific) were negative, but remained positive in the UK and the EC.