Character Group expects 'challenging' Christmas trading after profit dip

Character Group on Wednesday reported a dip in full-year profit on the back of poor conditions in the UK and Scandinavia and warned that the festive period will be "challenging".

The toys, games and giftware specialist booked a profit before tax of £11.1m for the year ended 31 August, down 5% on the year before, as cost of sales jumped by 13% to £78.8m.

Looking ahead, the toymaker, which works with licensed brands such as Peppa Pig, Teletubbies and Scooby-Doo, cautioned that "challenging trading" in prospect for the festive period will affect the first half of its new financial year.

However, the AIM-traded company remained optimistic about the second half as it expects sales to be bolstered by the launch of new concepts and products.

Meanwhile, the company reported that revenue for the year under review climbed by 13% to £120.4m, while it also hiked its full year dividend by 8% to 13p per share.

The company said the main factors behind its decline in profit were the failure of the Scandinavian toy market to recover fully from the demise of Top Toy, which had been the largest toy retailer in the region, the continued deterioration of the UK toy market and the weakness of sterling.

"Although this was somewhat disappointing and led to a downward revision in market expectations for the year under review and for the current financial year, the group's market share in the UK did not materially change in the period," added Character Group.

Character Group shares were down 7.47% at 384.00p at 1315 GMT.