November 24, 2008 9:46 am

Character Group sees little Christmas cheer

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

Shares in Character Group tumbled on Monday after the Doctor Who, Hannah Montana and High School Musical toy group warned of weak Christmas sales.

The group, which makes a range of toys based on television series, said it would not now meet forecasts for its financial year to August 2009 sending its shares 8½p lower in early trading, a fall of more than 20 per cent, to 32p.

The warning will send shivers through the high street, adding to fears that consumers will cut back on spending. Many parents regard toys as one of the last areas to economise on as they want their children to have a good Christmas.

The group’s toys and gifts have low to mid-range prices – a new Hannah Montana Sing Along Microphone has a recommended retail price of £9.99 while a 12-inch radio controlled Supreme Dalek is priced at £39.99.

The Aim-listed group is due to report annual figures for the year to last August on December 2, and confirmed it was likely to show a pre-tax profit of just £5m for the year compared to £11.8m last year.

However, Charles Stanley, the group’s broker, had been forecasting a rise in profits to £6.5m for the new financial year. The company said the new year had opened just as “world economies went into unprecedented freefall”. Retail sales, already under pressure, were now substantially lower than expected and the forecast was too high.

Kiran Shah, finance director, said November was generally the group’s busiest month as retailers ordered ahead of Christmas. There were still deliveries to go out this week, he said, but retailers had been reluctant to take inventory, and had been cutting prices as well. He said the group would give an update on sales with the results next week. He said the weakness in sales was across all the group’s ranges with no one particular character proving unpopular.

Mr Shah said he did not think a cut in the rate of VAT would “make much difference for this Christmas”.

The fall sterling had hit margins as the group imports its goods. Raw material prices which had been rising earlier in the year, also putting pressure on margins, were now falling again, and Mr Shah said he hoped to achieve better pricing in 2009 as a result.

The group would undertake a review of costs, “everything from top to bottom,” Mr Shah said.

The group said it had no gearing and its financial strength would enable it “to see the business through the current economic difficulties and be ready to take advantage of its market position as more normal times return”.

The group expects a boost to sales of Doctor Who merchandise in 2010 when David Tennant is replaced in the title role by a new actor, “whoever he or she is,” Mr Shah said.

Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

NEWS BY EMAIL

Sign up for email briefings to stay up to date on topics you are interested in

SHARE THIS QUOTE