Sales fell 3.9 percent to £54.8 million ($106 million) in the first half ended November 26th and haven't improved in the first five weeks of the second half, the firm said in a statement.
“Our full year sales, and therefore profits, are likely to fall short of current market expectations,'' said Tom Kirby, Chairman and Chief Executive.
Revenue and profit dropped in each of the last two fiscal years as demand for its Lord of the Rings-themed games and miniature figures dropped.
First-half profit failed to recover significantly after being almost wiped out last year. Net income was £76,000 ($147,400), compared with £65,000 a year earlier. Two years ago, the company made profit in the period of £5.1m.
The biggest drop in sales was in continental Europe, where revenue fell 7.2 per cent to €32.1m ($62.4 million). Sales in the UK and Asia Pacific were little changed in the first half, while US revenue rose 4.6 per cent to $22.9m.
Second quarter sales gave cause for optimism, however, with Kirby saying the figures “reinforce our confidence the business is returning to growth.”