Games Workshop has lost about a quarter of its market value after it warned on annual profits, blaming a slowdown in sales, especially in the UK and Europe.

The maker of fantasy figures for games based on Lord of the Rings said it was unlikely to achieve market estimates for sales of between £151 million to £162 million for the year to May 29.

"The sales shortfall is likely to impact materially on the company's profits and earnings per share in the current year," the firm said in a statement.

Shares in the firm hit their lowest in nearly 22 months, falling 181 pence to 535p in early trading.

Games Workshop joins a growing list of retailers to report a downturn in trading as debt- laden shoppers tighten their purse strings.

Boots, Jessops and Topps Tiles have all warned on profits in recent weeks.

Games Workshop said trading since its interim results announcement in January continued to be difficult, and especially well below budget in March, a five week period which included the Easter holiday.

But the company added its board intended to recommend a maintained final dividend of 14.025 pence per share for the full year.