Character warns it is stuck in the red

First it was the Dark Side of Star Wars that savaged Character Group's performance. Now it is the dark side of the British summer that is doing the damage.

First it was the Dark Side of Star Wars that savaged Character Group's performance. Now it is the dark side of the British summer that is doing the damage.

The toys and branded-goods maker said yesterday that poor summer sales caused by the gloomy weather would help to keep the group deep in the red in the second half.

The announcement, which knocked Character shares 13p lower to 63.5p, follows a warning earlier this year that over-production of merchandising for Phantom Menace, the latest Star Wars film, had holed first-half profits.

Richard King, Character Group chairman, said: "Everyone is struggling with summer sales. It's been pretty poor out there ... A large amount of [retailers'] volume of space is still taken up by summer goods."

Yesterday's news punctured hopes of a revival for Character that had built up in late June, when its shares were driven towards 150p on the company's association with the animated film hit, Chicken Run.

Character said "losses experienced in the second half were unlikely to be significantly less than those experienced in the first half", citing "abnormally poor weather". Mr King said sales were 30-40 per cent below normal levels.

In the six months to 29 February, Character posted losses of £5.95m, and analysts now expect full-year losses of close to £12m.

The announcement also highlighted a slew of other problems dragging on the bottom line. Character said that retailers had deferred orders for Christmas stocks beyond August, and many were moving towards a "just-in-time" style of stock management.