Profit falls at Character as UK sales shrink

Sluggish UK sales drove down annual earnings at toys and games firm Character Group and it now expects first half results to February 2013 to be disappointing.

The group, which sells branded ranges such as Peppa Pig, Fireman Sam and Scooby Doo, said pre-tax profit fell to £7.08m for the year ended August 31st 2012 from £9.05m the year before. Sales for the period declined to £74.95m from £94.95m a year earlier.

"Whilst international sales have held up well, UK sales proved much more difficult. We saw an increase in the volume of clearance sales, a reduction in normal margin sales and some retailers delaying their normal stock intake. These factors accounted for the majority of the drop in margin for the period under review," Character explained in a company statement.

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As well as tough market conditions, Character said market disruptions from Euro Football, the Jubilee celebrations and the Olympics also weighed on trading.

Otherwise the group said it is confident of a good performance from new lines such as Bin Weevils and construction toys such as the new Sports Stars. Character said it is optimistic that trading will generate stronger sales in the 2013 calendar year.

"Our established brands are performing well and our newly introduced lines have started the season with encouraging sales," it said.

Character believes that current weak trading is only a 'temporary setback' and underlined its confidence in future trading by recommending an increased final dividend of 3.3p compared to 3p in 2011.

Together with the interim dividend paid in July, this makes a total for the year of 6.6p up from 6p before.

"The current round of product previews with our major customers, in which we present next season's ranges, have gone far better than expected. This leads us to believe that we have a much stronger product portfolio to take us forward into the next season."

CJ