GW: The Financial Analysts Weigh In

Stock market data with uptrend vector. 3d render.

Questor has some tough love for Games Workshop – and advice for risk-taking investors.

BUY BUY BUY, but…

Questor, an Investment Management Company, has Games Workshop’s Stock at a “Buy” rating. This rating is also supported by broker house Peel Hunt as well after the financials for the company were released this past week. According to the UK’s Telegraph:

“After a troubling end to 2015, revenues at the tabletop games maker have recovered, and the stock appears reasonably cheap, at a price-to-earnings multiple at just 11.2. Coupled with strong cash generation and healthy overseas sales, Games Workshop is an enticing, if risky play.”

uk-eu

The Brexit may actually be a good thing for a company like GW who has a lot of business in exports. They do large amount of trade in both Dollars & Euros so a weaker British Pound can lead to higher exports for them because the price becomes more competitive.

On top of that their strategy to license out their IP to the digital realm (i.e., video games in all forms) has bolstered their royalty revenue from £1.5m to £5.9m. Turns out when a company doesn’t have to do anything but collect a check from a third party it becomes a very efficient way to generate a profit. If you recall, that royalty revenue is really what helped the company turn a profit this year:

via Games Workshop Annual Report 2016

Revenue: -1%
Operating Profit (pre exceptional items & royalties) -27%
Operating Profit +2%
Earnings per share: +10%

Tom Kirby, Games Workshop’s chairman, said, “It’s just that working closely with the myriad app developers, and being more precise with the terms we offer, we have increased the number of computer games in the market.”

2563041-eternalcrusade_selectionscreen_newFor a complete list of GW Licensed Products check here.

The Tough Love Part

However, it wasn’t all sunshine and roses from the analysts.

excerpt via The Telegraph (go read the whole thing)

“The most troubling element of Games Workshop’s most recent update is its attack on the benefits of management diversity. Mr Kirby said in this year’s statement that to “imply that someone is not independent minded because of time served… or whatever else is false”.

Questor fears that this kind of attitude does not lend itself to bringing in new thinking. A promise from Mr Kirby that the company’s next chiefs will be internal hires, with at least a decade inside the firm, suggests that there is a risk of groupthink  in the company.

The chairman’s comments came as Games Workshop grapples with a secular threat. The business is reliant on a generation of loyalists, who, as they have aged, have been able to absorb increasing prices. They will not be around forever.”

The key take aways from these warnings are:

  • There is a risk that the chairman is too closed minded with company hiring practices and the attitude presented isn’t reassuring.
  • The past strategy of the “annual price bump” can only be absorbed by the current player base for so long – those players are “aging-out” and there is a risk that the “next generation” of players will be priced out altogether.

With a lack of “new blood” comes a lack of innovation. If any company’s management suffers from groupthink there is a risk that they will double-down on practices that were successful in the past but may no longer be viable.

pile of money 1280x720

Even with those associated risks, the analysts are still saying that now is the time to buy – What do you think? Would you put your money on the line?

 

Is the Risk worth the Reward?

  • MPSwift

    Risk of “group-think”… I’d say we’re pretty safe on that score based on the changes seen since Kirby’s departure!

    • Crevab

      I look forward to when he loses his Chairmanship. The financial reports won’t be as bizarre, but the company should be better off

    • Mira Bella

      He Is not gone. Kirby is still on the board and he holds quite a few shares himself.

    • Zingbaby

      Yeah and I think it will continue to get better… this article left out some quotes; this one in particular is important I think:

      “…we finished the year with sales of Warhammer: Age of Sigmar at a higher rate than Warhammer has enjoyed for several years.”

      • I’d say a lot of that is down to people panic-buying old WHFB models before they went off sale. See Tomb Kings, Empire and co, a lot of kits of which needed another production run, which is insane considering the whole point was dumping stock and scrapping the line.

        • Zingbaby

          Huh? …except their quote seems to suggest the exact opposite. Sales only increased at the end of the year, long after your so-called panic-buying. And they specifically said that Age of Sigmar was selling, not oop WHFB. Haha nice try though, look – nobody was buying WHFB, that’s how we got here in the first place.

        • ragelion

          A rather accurate rumor monger said that the panic buying did not do much since they did not have much in their warehouse in the first place. Hence why they went so quick.

    • DeadlyYellow

      I thought Rountree was the one we were supposed to hate?

  • Randy Randalman

    They’ve done nothing this fiscal year except make good decisions thus far. “Group-think” is only a bad idea when the internet claims it is. There’s no denying the results we are seeing. The numbers will catch up to them. Expanding into all this new IP territory, as well as a record number of minis, board games, and other content, is expensive. Lower cost of entry with the bundles, board games, cheaper books and Start Collecting sets will also cost them short term gains. But with open communication via social media, and now seeing AoS outpace what Fantasy did its last several years are signs towards growth. 40k has slowed down without a major release in months, but the FAQ’s and rumors point to a big year upcoming. That said, 40k is still the top game, and GW has found new ways to generate revenue.

    They will be fine. The internet has misread (and therefore declared the sky is falling) for ten years now. They are heading in a good direction.

    • Horus84cmd

      Lots of people just like to find anything, big or small, to attack GW.

      Note: This also a general, internet and life, phenomena not limited to just GW but also about any subject out there.

      • Hawt Dawg

        Apple…

        • euansmith

          Yeah, but, in that case, it is well deserved 😀

          • Admiral Raptor

            It’s usually always deserved in the case of large companies. They’re all pretty awful. 😛

        • Spacefrisian

          Bananas

    • Thomas Gardiner

      And yet, despite all these “good decisions,” their core business of selling models is down, even with any boost from AoS.

      It’s almost as if their pricing structures is utterly insane or something.

      • Horus84cmd

        Although there maybe, perhaps, elements of this. The down turn is much more complicated and not exclusively a issue for GW.

        High Street retail business across the board are struggling because of the uncertain and unstable global economic conditions. The end of year results are pre-brexit; so there is no real knowing what impact that is going have on the short and long term (on GW or the UK and the World). People wages are, at best slowly, rising compared to inflation – so there is less disposable income to go round. Prices for pretty much everything companies and people need to exist are going up at high rates. All these are just the big issues – there are myriad of micro problems out there to navigate.

        • Thomas Gardiner

          Yes, and raising prices in a market where disposable income is stagnating is a terrible business decision. Most big businesses would cut prices to encourage spending in that scenario (remember in ’08, how business would advertise “recession-beating” price cuts and banks boasted about rock-bottom interest rates to encourage borrowing?).

          And yet, in a market context in which disposable income is at a low, GW see fit to continue the price creep. That’s business 101, it’s incumbent on them to stimulate demand for their core product and they’re failing miserably. Indeed, they’re actually seeing contraction on their core business.

          It’s telling that licensing is what’s keeping them afloat. Say you like the whole vibe of the Warhammer world but you don’t like the idea of paying £200 for a small army, then more for paints and supplies. You can just buy a £40 video game and get some sense of that “Warhammer experience” instead.

          • Axis Mundi

            You are choosing to ignore that they have held or cut prices on all of their older models, just applying the price increases to the new kits.

            This new approach to pricing, with Start Collecting boxes offering 30% to 40% discounts, limited release army collections for the new books offering discounts of up to 70% and the re-boxing of older models with a saving (usually by selling them as boxes of 10 or 20, rather than 5 or 10 admittedly) on the old price, coincided with the reported improvement in sales post December. I suspect they might be linked 😉

            The most recent AoS release, the Sylvaneth, also saw them reverse the recent high pricing trend – well, in part anyway. Alarliel was still eye-watering, but the troops were much more reasonably priced.

            Also, Brexit will have a doubly postive impact for GW – in the UK their competitors have all just become 20% more expensive. To protect themselves from further currency drops, and to recoup losses in the run up to Brexit (as no one expected a leave vote, prices were held even though the pound had fallen for a couple of months ahead of it), some distributers have put their prices up 25%! Your LFGS will absorb a bit of this for the next month or two, but by the autumn Warmahordes and Malifaux will look pretty pricey on shelves in the UK.

          • euansmith

            The Starter Boxes are a great way for GW to go. They get more cash per customer and the customer gets more stuff for their money. Win-win!

          • Admiral Raptor

            “limited release army collections for the new books offering discounts of up to 70%”

            Can you give me some examples of these? I don’t frequent the GW website very often, so I may have missed seeing these bundles. 70% off seems unbelievable for anything GW produces.

          • Zack Seiders

            bonesplittas foot soldiers again for example. “old fantasy box cost 30 bucks for 10 boys(not including tax). New box for aos setting has 20 boys for 50 bucks. Giving that orcs and goblins for most part is a horde army, this is more or less paying more for the kit of 20 boys, in value it is still 10 bucks cheaper than what could of been. For the veteran who sees this, this does mean that the old models are finally getting… cheaper. For the new person however this is still intimidating expensive and for the veteran this is still paying more money just to get the basic foot soldiers “enough to use bare bone but still alot of money”.

          • Thomas Gardiner

            And yet, despite all this, GW’s core business of selling models is still contracting. It could be, even with only new kits raising in price (which is still price increases by another name as vast swathes of the range get replaced with new boxes that jack up the price), that GW’s entire pricing model is still nuts. As a value proposition, most people will still say “that’s a lot of money for plastic soldiers” and pass on.

            Maybe if they actually properly cut some prices, held sales etc. they’d see some movement. And I’d happily bet my entire life savings on the Brexit “windfall” not being passed onto the consumer (it won’t affect many of us anyway, as we live in Britain and have just seen the real value of our wages fall considerably).

            A few “get started” boxes doesn’t really make up for the fact that GW’s general pricing model, even as a niche market luxury good, is pricing out a good number of potential customers. It also doesn’t change the fact that GW’s rigidity means that they haven’t nearly done enough to respond to the difficult economic circumstances.

            They seem to be treating their luxury good as a product with inelastic demand which, again Econ 101 here, is dumb af. The demand for luxury goods is the first thing to go in a poor economy. Hence, the poor sales data which, talk about discount starter sets all you like, you can’t really argue with. Like I’ve said, it’s telling that analysts outside the hobby (hence with no aspect of “fandom” clouding their vision) have brought up these exact points.

            As much as these numbers aren’t dire, they aren’t great. And trying to spin them as a step on the right track isn’t really helping.

          • Axis Mundi

            Hmm. I was just trying to point out that GW are doing a lot of new things since the start of this year, and they allude to improvement in sales as a result.

            The AoS launch was dreadful, and 40K seems to be in dire need of refreshment and re-launching – I was actually expecting their results to have been much, much worse. So while your analysis is spot on as a description of GW in the ten years up to the end of 2015, I’m just suggesting that they are now doing things to address some of the problems – and it seems to be working.

            As for price-cutting, sales, inelastic demand, luxury goods etc – I’m not a retail analyst, so I’m not sure on those points. I know that price is just part of what I look at when deciding what to buy – and not the biggest part either.

            Whether I have time to build and paint the models is much more important, and whether I have room for them or will play the army is also very important. It’s a weird product that way – the time sink factor is massive, unless you are the kind of player that is fine with playing with bare plastic and then e-baying them 6 months later.

            That hobby/gamer aspect of the purchasing decision is also interesting, as I think it’s something that analysis that doesn’t factor in the “hobby factor” wouldn’t get – possibly disastrously for the company, which is maybe why they are so keen on promoting internally?

            Anyhoo I’m not trying to spin anything here, I just think you’d maybe underplayed the changes in 2016, and that they might be more significant than you are assuming. Today, when an interested bod wanders into a GW, they can actually walk out having spent as little as £20 on the new Storm of Sigmar starter for AoS.

            Yeah, from our perspective as seasoned gamers, it’s hardly a “game” – but actually for what you’ve spent it’s pretty good. That same person last year would have probably walked out having spent £0, having baulked at forking out £75 on a Starter set. Now they might come back in a few weeks later to buy the £50 Start Collecting set… and all those profitable paints to go with it.

          • happy_inquisitor

            If you work through the pricing for AoS there are real signs that they understand and are trying to respond to the cost of entry issue. Even at the level of reboxing models with double the number of figures for a 50% increase there is a clear movement.

            The community engagement for AoS is now exemplary.

            From a poor start AoS is now doing all the things the community was asking for as much as any real business could. The next year will show if the community voice was real or if it was just keyboard warriors.

          • Thomas Gardiner

            I dunno, I haven’t kept up with the pricing but they seem to be following a structure of “20 basic dudes for £30, 5 Elite dudes for £35-40, Monster for £65-100.” Apart from the basic troops, it seems like cost of entry is getting worse and worse.

          • vlad78

            Take into account the basic AOS product is of really dubious quality before talking about community voices.

            The rules are simplistic and clearly a departure from any pretense to be a wargame or a simulation of any kind, the aesthetic is not of everyone taste (certainly not mine) and the fluff is atrocious.

            GW is boasting AOS is doing better than WFB did for years, but 8th edition was WFB death knell, a bloated edition designed purely to milk customers (while AOS was already being written) which fared pretty poorly.

            Yet as Thomas said, GW keeps losing sales and its profit is saved purely by licencing games which use the 40k or old world lore.

            I’m not saying GW is not heading in the right direction concerning their pricing of their product, but it’s clearly still extremely expensive for what you get.

        • Gorsameth

          The tabletop gaming market has been growing for multiple years now. The global economy doesn’t seem to be that big a of a problem for the rest.

          • Horus84cmd

            How would we know for miniature game specifically. As I understand it the tabletop games market also includes board games, card games etc…

            For miniature tabletop wargames, as I understand GW are the only one we can see the actual finances of as it is a PLC and not privately owned (I get lost with US laws and FFG do they have to publish result like a UK PLC?)

          • Xodis

            Has been growing because of super cheap Kickstarters that cut out the middle man (FLGS’s) and outside of providing a cheap entry fee has not really developed any type of business like PP, GW, Mantic, or any other long term brands.
            Its also been growing as small “can not even dream of comparing to GWs Financials” 5-man operations that have a fraction of the same operating cost.
            So until PP, Mantic, or Corvis Belli release some number we cant really compare GW to anyone because no one we know about is in the same ballpark.

          • Charon

            It does not matter how big they are.
            Money spent on them is money not spent on GW. Take Khorne Fleshhounds for example. I know a lot of people who just use the better looking and cheaper puppetwars barghest.
            Also De Grotesques. There are an awful lot built from horde warspears and leftover Talos/Chronos bitz. Thousand sons rubrics and terminators? Wargame exclusive get you covered… superior bitz to way lower prices. Got 20 of them now… even if they bring Rubics in the next few months… I do not need anymore and gave my money to another company.
            Thats all money GW is not gonna collecting. Even worse. Thats money they wont even get when they bring out new minis for them now.

          • Xodis

            Thats assuming money spent on KS’s actually effects a players GW budget since most people I know have different budgets set aside for each of their hobbies, and the difference is that KS is like an impulse buy, where most GW stuff can always be purchased at a later time.

            As for 3PP, they have been around forever, I doubt GW sees them as a series competition to their financials. In my experience most people prefer “Official” bits and pieces over 3PP since it usually cost more to convert an entire army over a single squad or two since most bitz depend on at least some of the original model.

          • Charon

            I don’t kow. most people I know have a “hobby budget”. Not a “GW budget” a “video game budget” and “comic book budget”.
            Nobody is gonna pay less rent because of a GW purcase or saying “well i can never afford the new PS because I have this fixed GW budget”.
            Also 3PP may have existed forever but the were never as detailed and beautiful as today. And im not talking about some bitz here (like victorias female guard heads) but genuine complete models that look better than the original.

          • Xodis

            We will have to agree to disagree on 3PP models looking as good or better than the originals, but as for the Hobby Budget my point is a Hobby budget usually incorporates multiple hobbies, so GW or any retailer is never getting the full budget every time anyways, so GW MAY not get a persons budget in July when there is a Reaper KS going on, but again all those same GW items can be grabbed up in August when the budget is back.

      • Zack Seiders

        Bonesplittas is one example. while 2 packs of 10 savage orcs cost 30 bucks each. The pack of 20 cost around 50 bucks “10 bucks less expensive than what could of been.” While cramming more models in the box and charging more money for them makes sense (savage orcs are a horde army so that pack of 20 boys should give customers the idea of how the army is played while making it easier). It is still charging more money for the basic pack (I am referring to the 20 boy pack) which for the new person is still intimidating.

    • Richard Mitchell

      Ahem, X wing is the top game. 40k and AoS are not getting significant new players, so people are being priced out. But you’re right GW will be fine due to licensing and the devotees will continue to pay the costs necessary to play. Now is the time to buy stock and its value is low right now. And with licensing being their main source of income, not miniatures, their profits can only go up.

  • zeno666

    “Tabletop games maker”, that was funny 🙂
    X-Wing looks fun though…

  • matty199

    No thanks
    Investment decisions should be about returns and fundamentals not about a company that produces stuff your into
    there are better companies to invest in

  • jasonsation

    The dude’s name is Questor?

    • Horus84cmd

      sadly not. That article series name. His name is Peter Spence 🙁

  • Horus84cmd

    Yey “Armchair Executives Episode V: The Internet Strikes Back”

    1..2..3…annnnnnnnnnnnnnd go

    • Crevab

      You posted after Randy

      • Horus84cmd

        hey no-bodies perfect lol

        • Crevab

          Not with that attitude

          • Horus84cmd

            Light and droll jokes are “attitude” now? Wow, just wow

          • Crevab

            I… what?

          • Theodosius

            I think Crevab’s comment was in fact intended as a light and droll jibe, that’s how i read it anyway 🙂

          • Frank Krifka

            re really need some sort of sarcasm or droll font so everybody knows when somebody is being funny

          • Hawt Dawg

            A little bit lacking in TV culture are we?

            Famous line that one.

    • Mira Bella

      Ehh five comments up you gave us your own “Armchair analysis”.
      You claimed a bunch of stuff without providing any source.
      Quite schizophrenic if you ask me.

      • Horus84cmd

        Not on the the report itself. I was passing comment on issues and circumstances that related (and well talked about and discussed in general news media) but not specifically about the report itself and the “meaning” of the report one way or another.

  • benn grimm

    It would be great if they gave away shares with the models, then the people who invest most in the hobby would also be the people invested most in the business…

  • Thomas Gardiner

    I said this in the previous article. The way GW operates, especially with its hiring practices, suggests a very conservative approach that’s afraid of bringing on new talent. They’ve always seemed to hire based on who gets on best with the executives or the design team, rather than on talent.

    They’ve always struck me as a very insular, rigid, old-fashioned kind of business that’s struggling to adapt to fluidity of business in the modern era.

    • Ragnar Black

      Hmm I think new models really contradict your statement. I think that at least in the miniature sculpting they really let the team gout out of the leash.

      Even if I don’t like the new looks I am able to admit that…

      • Thomas Gardiner

        But can we really say the same about the quality of game design (personal preference maybe, but it’s widely accepted that 40k is a friggin’ mess and it seems to be 50/50 on how people feel about AoS)?

        Or even artwork and writing? I’ve noticed a definite decline in quality there. Same old faces pumping increasingly tired and silly writing (The Beast Arises being a great example of a series that started with promise then ended up falling into the dumpster), and a very noticeable decline in the quality of SOME art (leafing through the new Dark Angels book, I’m struck by how much of the art is low-detail, cartoony nonsense with terrible proportioning. That and about 50 pages of “line art”).

        Couple that with a, frankly, bizarre business culture that some observers outside the hobby (business types and potential investors) consider overly paranoid, insular and often litigious, and I think my point is fairly valid about a sense of general decline.

  • Gorsameth

    Operating Profit (pre exceptional items & royalties) -27%

    Operating Profit +2%

    That to me is a problem.
    GW’s financial report basically got saved by royalty income from a ton of games (most probably from Total War).

    No they are not going to go bankrupt or anything like that, but the decade long slow and steady decline of model sales is continuing.

    And for a company that primarily makes models that is a problem.

    • Axis Mundi

      For a company that primarly makes models, I’d say the biggest problem they face is what 3D printers will be like in 10 years time! That they are now, finally, realising that their real value is in generating and licencing IP gives me some hope for their future.

      • Hawt Dawg

        Agreed!

        If I was a shareholder with GW stocks, I could less what they sold. Miniatures, computer games, old Ultra Marines’s underwear etc. Just as long as they make money on the IP.

    • wibbling

      Considering their operating costs declining revenue isn’t an issue. Previously the store model was the only one. Now there’s plenty of on line outlets. As this continues Workshop will start to reduce the number of stores and continue to make a profit.

      • Malthrak

        it is when that declining revenue has been the trend for over a decade and cost cutting has been largely reliant on non-repeatable actions. It can only go on so long, and is indicative of the core products of the company becoming increasingly less lucrative. They’re selling less stuff at higher prices to fewer people.

      • Mira Bella

        What?!
        Again you have absolutely no idea what you are talking about!
        They just opened a bunch of new stores!
        Some of them are the new bigger hobbycenter kind like in Munich and Kopenhagen! (which Is a good thing!)

        Are you just comming here to preach your baseless propaganda?

        • Hawt Dawg

          No he is here to make you angry.

          Mission succeeded!

          • Mira Bella

            Your are damn right about that!

          • Hawt Dawg

            Hate to break it to you but a mediocre online psyche is not a virtue…

          • Mira Bella

            Thats ok my dear. I don’t come to this site to prove some random Internet person what a fantastic, human being I am. 🙂
            I would say that Im a pretty mediocre person all around and problably just as flawed as any of us. (except for you my friend 😛 )
            Do you know what I consider a virtue? Being able to admit that one was wrong/made a mistake, to apologiese for it and show genuine remorse.
            Something that wibbling still has to do and we easily argue about the same topics for 3-4 years.
            Oddly enough I did just that in this very thread.
            And for the record. I just took a nice nap and now I feel sooooo much more relexed/mentally balanced now! 🙂
            Im sorry that I offended you with my flawed personality. I recognize my failings and will be sure to correct them.
            I hope you were able to understand or should I shout louder so you can hear me on your high horse. :-*

            Hugs and kisses.
            Bella

          • Hawt Dawg

            Dunno what you just did, but my high horse seems to like you.

            And 3-4 years arguing online over games? And I thought I was a serious gamer. Hats off to the both of you! 🙂

          • Mira Bella

            😀
            Pah! 4 years is nothing! You should see tweetlebeetle and me in action! That one has been going on since BolS released Macharian Crusade which was in 08 if I recall correctly. 😉

          • Hawt Dawg

            Can I buy your fervor and spare time?

            You make me look amateurish.

    • Oliver Grimwood

      Revenue was down by less than 1%. A quick scan of the report shows that the pre royalties profit drop is because they’ve used a load of money to expand their business (about £3M on opening new stores for example).

      What they’ve done is, knowing they’ve got a load of royalties coming in, invested the money back into themselves in an attempt start to grow the company (without causing a big drop in overall profits). Rather than just hand it out to shareholders. Seems like a sensible move to me. Of course we won’t know if it’s worked till next year though.

      • Malthrak

        The problem is that this has been the case in the past, and revenue continues to decline, and has for the last 12 years.

        • Oliver Grimwood

          it hasn’t really, it plunged after the LOTR bubble rose again for a number of year before dropping over the last 2-3 years. But my point would be that the drop of operating profit is due to them seemingly my trying to do something about the fall in revenue.

          • Mira Bella

            That is just a lie. They are declining since 2010.

          • Oliver Grimwood

            Revune 2011 £121M

            Revenue 2012 £131M

            Revenue 2013 £134.4M

            That’s going up.

            They’ve been declining since the 2013. 2-3 years ago. They have gone up and down over the life of the company though.

          • Mira Bella

            I just checked those numbers and you are correct. Revenue has been going up between 2011 and 2013. They released their first annual report in 2006.
            So wie have a decline from 2006-2008 (115-110M)
            A nice increase from 2008-2009 (110.3-125.7M)
            Very very small increase from 2009 to 2010 (125.7-126.5M)
            A decline from 2010-2011 (126.5-123.1M)
            A good increase from 2011-2013 (123.1-134.6M)
            A Big decline from 2013-14 (134.6-123.5M)
            Same Again from 2014-2015 (123.5-119.1M)
            And a small decline from 2015-2016 (119.1M-118M)
            They are now a Little bit better of then in 2006.
            So it was an uphill and downhill until they peaked at 2013 and are on a downhill trend since then.
            Would you agree with that?
            Im sorry that I called you a liar.
            To my excuse Wibbling got me pretty wound up by his bull€&@t about them closing Stores this year which im sure know Is incorrect. My temper got temper got the better of me.

          • Oliver Grimwood

            Yes I would agree with that

            I’m not really prepared to die in a ditch over any of this, just seemed like an interesting topic to while away the train journey.

            Also they’ve opened net 30+ stores this year so you’re right on that one.

          • Mira Bella

            Again sorry that I jumped down your throat.

          • Stealthbadger

            Essentially they’ve bobbed up and down. Remember though they are affected by more than just their own internal plans. The economic decline after 2088 will likely have had an effect as surely some loyalists or other customers suffered where they lost jobs or had to belt tighten.

            I see these reports and just think it’s pretty good they are even still in business. Look at companies like Hornby trains…

          • Mira Bella

            Hey badger.
            I had to google Hornby trains and what I found didn’t look good.
            Never heard of them before. On a related note, a very good friend of mine has a “purchase and resell” (I really don’t know if that Is the correct term) store in which he mainly sells model trains and he told me that the Hobby is slowly dying because there is very little new people joining in. He also told me that it’s very expensive to buy new and a lot of people would buy their trains second hand for quite a while now.

          • Stealthbadger

            Hello,

            They’re (or were) a British institution in a way, selling trains and scalextrix (slot car racing in the US I think). Massive when I was kid but for reasons you’ve already identified now in trouble, these are often reason quoted as challenges for GW and yet they seem not to have been hit as hard despite not having the mass market appeal Hornby once did. It’s why when I see GW wobbling a bit rather than In a full on slide, all while being debt free, I think to be honest they’ve done an impressive job at running the business.

            Many on here, sometimes myself included, do not like small scale decisions e.g. on pricing, rules etc. But ultimately the strategy they put in place for longevity seems to have worked well to date in riding out wider economic conditions.

            For me the interesting questions are how they’ve done it:- Is really just due to die hard loyalists who will eventually age out? Maybe. But to be honest if you’re 30 now and still play why would you stop anytime soon? If they loyalists do chuck it all in do the current GW board even care if this isn’t going to be for another 10 years? Look at the current board pay, think they really care if GW tanks in even a year or two?

            Overall, I hope they continue as I like the games they produce. I find it odd though why so many on here seem to delight in their failure. If GW went under it would be bad in my view for the hobby as a whole as even as a gateway GW seem to have got most into the hobby.

          • Frank Krifka

            good show mate.

          • Malthrak

            GW’s revenue has had a couple ups but even those, once adjusted for inflation, largely were more plateaus, their revenue (adjusted for inflation) is down 50% from its 2004 high and is now back down where they were in ~1996/1997, 20 years ago, and that downward trend shows no sign of stopping.

            Sure, the drop in operating profit can be seen as attempts in investment to reverse that trend, but thats also been the excuse in many years past with no meaningful reversal of that revenue decline.

            We have to remember this is the same organization that put itself into the red to borrow money to pay dividends at several points (largely to double Mr Kirby’s income given his stock holdings) and that seemingly only hires upper management from longstanding internal candidates that seemingly all tow the same line.

          • Oliver Grimwood

            Revenue was just shy of £60M in 96 wasn’t it?

            I just chucked it in a inflation calculator and they reckoned that would £80M today. But I can’t be sure how accurate that is.

            Never seen anything on the borrowing thing I know they didn’t pay dividends for a couple of years which didn’t help. They’ve been quite keen in advertising they don’t have any debits at the moment.

            I might argue that the downward trend of recent years is slowing but I’d agree that they do need to reverse that. And I’m hoping we’re seeing them trying to sort it.

      • Charon

        Remember a few years ago when they closed a lot of stores and cut back the rest to 1 man stores because of declining profits?

        • Oliver Grimwood

          Well trying to modify your approach if it isn’t working sounds sensible. They have been opening larger stores in select areas as well. Seems to me like they are changing their approach and have been spending a bit of money on it. But like I said we won’t know if it works till the next report.

          • Charon

            I dont know. To me it is an empty phrase. I mean what else are they supposed to say?
            “We are hell bent on doing this even if it isnt working”?

      • Mira Bella

        Maybe you should not just quicky scan the Report.
        Maybe you should check out Page 10 for example.
        Maybe you would see then that they investested just marginally more then last year.
        Am I the only one here who actually reads the bloody report before posting?!

        • Oliver Grimwood

          Don’t what you are talking about that shows they spent more than a million pounds in a number of areas more this year than last.

        • Oliver Grimwood

          Hmmm seems to show assets going up by over £2M.

          I don’t think it worth you and I having a conversation though.

          • Mira Bella

            They spent 7.8M in 2015
            Their Investment in assets was 7.8M in 2015 and 8M in 2016
            You could be right about The second part since I had a really stressful day.

  • Old zogwort

    It keeps me wondering if there still would be any room for GW to reduce their prices. Or if they have locked themselves in with on one side being too costly a large portion of the players and on the other side With the whole apple pricing effect of premium goods, and not wanting to look like cheap toys based on the price etc.

    • Axis Mundi

      They have reduced prices – since January they have released the Start Collecting sets and have reduced the price per-model on all of their re-boxed AoS sets. It seems to be working, so hopefully we’ll see more of the same!

      • nurglitch

        Plus there’s all the stealth sales in the form of miniatures in boxed games.

  • It would be awesome if GW wasn’t the only company we could see financial data on in the wargaming industry.

    • Oliver Grimwood

      When they were first bought out by Asmodee they published FFG’s revenue (about £25M) but nothing since then.

    • WellSpokenMan

      I think of it the other way around. It would be great if we didn’t see GW’s financials as that would mean they were a privately held corporation.

  • WellSpokenMan

    Hmm,!so the snarky tone in the report was off putting for some analysts. That’s interesting. It’s also interesting that Questor assumes that GW will lower prices in the US and Europe because the Pound fell. I sincerely doubt that they will.

    • nurglitch

      When the Canadian dollar was around 1:1 with the American dollar GW miniatures were much more expensive in Canada than the US, to the point where ordering from a 20% discounter in the US worked out to 50% the Canadian retail price (not including the sales tax…, up to 15% in some provinces). I think the US distributors, I forgot what they’re called, may have benefited.

      • WellSpokenMan

        GW has blocked UK sellers from selling to the US (I’ve checked). That might work for the EU though. I think GW is missing out on a chance gain additional sales in the US if they don’t lower prices, but I still don’t think they will. It’s too bad. A price drop for AoS combined with the positive buzz they’ve been getting this summer could really boost the game’s popularity.

        • Stealthbadger

          On Europe I think there’s a free market thing meaning GW can’t restrict sales in ‘member countries’. Lots of uk web retailers have disclaimers saying they can’t ship to non European countries.

          This may change after Brexit (for the worse) with uk discounters bring prohibited from selling to European countries too. Guess it depends on what regs we keep. This means GW could see increased sales from their own stores in mainland Europe if they manage to hammer the online discounters in the uk, stopping them undercutting their European stores.

        • nurglitch

          I thought that the cheap starter kits for AoS were the equivalent of a price drop. Given that GW has committed to never having sales or rolling back pricing, producing new SKUs using similar components to existing products seems to be the way they’re going about it. And for AoS that works well, because AoS scales well.

          • WellSpokenMan

            That’s true, but with the current exchange between the Dollar and Pound, those Start Collecting kits would be about $20 cheaper. For someone, like me, who is still on the fence about AoS, $20 bucks makes a big difference. I’m not saying GW’s approach is wrong, but it’s not working on me.

          • nurglitch

            There’s plenty of people that will sell you a Start Collecting kit at 20% off. As they’re US$85, that’s US$17 off.

  • frankelee

    The one thing people have to realize is that companies don’t fight to stay alive. They don’t get emergency treatment, or trim down operations so they can persist, they go into the red and they either immediately come back out or their assets are sold off and they die. GW has built a very large and successful operation, they can’t ever go backward from that, they have to stay as large and as successful or they’re done. It’s hard to see their current direction allowing that to happen.

  • ChubToad

    I read in the Fantasy Flight Forum that they lost the 40k license recently. Anyone know s about this?

  • Jim Collins

    Goes to show you how one seemingly minor business decision (at the time) can make the difference between struggling, or just collecting IP checks out the wazoo.

    Then there’s the after.

  • Thatroubleshootah

    I think gw is going to go the way of the comics industry. Used to be they sold comics as an end. Now the comics are crazy expensive but mainly serve as ads for the movies and video games that make the real money. Disney makes so much more from an avengers movie they couldn’t give a crap how many avengers comics they sell.

    Gw will be transitioning from models to video games more and more as we go forward. With video games they get no complaints, get no criticisms, don’t have to maintain shops or a website or anything.

    They see 3d printers coming and know they can’t maintain their current profits in a marketplace that is constantly getting more and more crowded.

    • luke snell

      excellent point and a decent parallel, though GW and tabletop gaming is more of a niche market; all the more reason they will need to rely on other streams of income than their flagship products. regardless of these numbers- they are still in the beginning phases of major change within the past year, so I think the next year at this time will be more telling- the fact that they are injecting more capital into new product offerings and expanding their footprint on the ground with retail space, well, a company that knows it has no shot at righting a ship in sinking would not hemorrhage capital as a last ditch effort. seems that way to me at least.

    • Stealthbadger

      You may be right but my view is they’ll stick stubbornly to the “we’re a model company” mentality meaning they’ll always have that as a primary business activity. I’m not sure they have the mass market appeal or even the diversity of marvel to develop the movie franchise success you refer to.

      • Thatroubleshootah

        The return on investment is so much higher from licensing their iP that putting with the infrastructure of being a model company will gradually dimiNish. The model business will exist to support their video game biz.

  • Commissar Molotov

    “The chairman’s comments came as Games Workshop grapples with a secular threat. The business is reliant on a generation of loyalists, who, as they have aged, have been able to absorb increasing prices. They will not be around forever.”

    Thanks to GW’s inane policies, more and more of ’em ain’t around RIGHT NOW.

  • John Robert Hurley

    “The business is reliant on a generation of loyalists, who, as they have
    aged, have been able to absorb increasing prices. They will not be
    around forever.”

    This is essentially what a lot of people — including me — were saying before WHFB got killed off. Specifically, that high cost was a barrier to entry keeping new blood out of the hobby, and that the player base was eroding.

    Lots of people here claiming that since we weren’t in GW management, we didn’t know what we were talking about. Here’s an investment management company saying the exact same thing we were 2 years ago.

  • Painjunky

    Operating profit -27%!!!
    They made a 3rd less from selling minis in a single year!
    That is a frigging massive problem!
    IP will not save them for much longer if this continues.
    I not want GW to fail but unless they knock it out of the park with 40k 8thed they are in deep crap very soon.

  • SacTownBrian

    Huh, when I said the drop in the pound exchange rate was good for GW everyone on BoLS called me stupid.

  • Jay

    I am hopeful for GW after seeing their huge increase of actual discounts with multi item boxed sets. This has encouraged several people I know to consider 40k or AoS. They also listened on putting competitive rules out for AoS, which is huge for my interest in the game.