Chicken Run fails to save toy firm's year

The animated blockbuster movie Chicken Run has failed to help Character Group stage a great escape from its own recent difficulties.

The UK firm, which also produced toys for the latest Star Wars film, saw its value slump by a fifth after issuing a profits warning.

Chicken Run had one of the UK's best ever opening weekends

It said profits for the year to 31 August would be hit by the "abnormally poor weather" in the UK, and delayed orders for Christmas sales.

The company has also been hit by the cost of clearing unsold stock - much related to the latest Star Wars movie - from its shelves.

It said its results were likely to be "substantially worse" than market expectations.

Shares halved

In the first six months of the year the group reported pre-tax losses of £6m, blamed largely on poor sales of Star Wars merchandise.

Its profits warning on Friday said that there had been little improvement in the second half of the year.

That sent its shares sliding from 76.5p to 62p in early trading.

That is less than half the 139.5p they were worth at the end of June following the huge success of Chicken Run on its opening weekends in the US and UK.

Character Group chairman Richard King said that sales related to the movie had met expectations, with more timed to coincide with the video release.

Annus Horribilis

He told BBC News Online that Chicken Run merchandise "was never going to be able to save our year" because the company had become wary of putting all its eggs in one basket following the Star Wars 'flop'.

He said bad weather had hit sales of traditional summer earners, like waterpistols, added to a general decline in spending in shops in the UK

A series of cost saving measures, and new product launches meant the firm was now "through our worst period - looking forward after an Annus Horribilis".

Among the new products aimed at the teenage and young adult market is a digital camera, already launched in Japan, which was said to be proving a success.

This camera, costing about £79, can also record 15 second video messages that can be emailed, with a new model next year likely to have an MP3 player built in.

The Great Escape

Character Group has had high hopes for the success of Chicken Run after it became one of a number of companies to get their fingers burnt by over-estimating the popularity of last summer's Star Wars The Phantom Menace movie.

The firm was forced to issue a profits warning in April after shoppers failed to snap up watches and stationery tied to the Star Wars film and subsequent video release.

Chicken Run, made by Oscar-winning animator Nick Park of Aardman Animation, creator of Wallace & Gromit, has an all-star cast of voices including Mel Gibson and Miranda Richardson.

It grossed nearly £4m at the UK box office at its first weekend - beating Notting Hill, which became the biggest British movie ever.

The film shot to the top of the British box office charts, and was the 14th biggest box office opener of all time.

The film is based loosely on The Great Escape and is the first of five full-length films to be made by Bristol-based Aardman Animations - best known for its Wallace and Gromit films - with Steven Spielberg's Dreamworks company.