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@kroothawk: For sales, part time is down but full time is up. You cant really know what is going on because the comparable units are FTE (full time equivalent). Anyway, they changed the model of how they operate their stores so you would expect there to be fewer employees.

The fact that sales are flat does not support the hypothesis "GW is in financial trouble".

Sales profits are flat.
We know they've (significantly) raised prices.
Those two facts together mean that sales overall are down.

As a singular indicator it's meaningless. Together with other facts it can mean bad things to the health of a company.

comparing GW to hornby actually is a good way of showing how 2 companies in the hobby business go about things, hornby like all model railway companies announce their upcoming products sometimes up to 2 years in advance and will regularly show 3d cad and pre-production model samples of forthcoming releases with a view of actively encouraging people to comment or criticise them so the final product can be made as perfect as possible, if they show a train that many people point out is painted in a slightly wrong shade of paint that will get corrected, customer satisfaction is high on the priorities of all model railway producers. 2 years ago dapol an english model train company made a model of a HST coach but due to a mix up in production they found the entire batch had some wrong details, now they could have sold them anyway being the only model of its kind available people would have had to buy it anyway, but dapol not wishing to have their reputation tarnished scraped the whole lot losing them 10's of 1000's £ (cough finecast cough) imagine if GW got customers involved!,

but i think there is one thing GW is copying from model train manufactures and that is that all train models are limited production, every company makes a batch somewhere between 500 to 10000 depending on the company and wont make that model again for years, that way people buy them quick before they sell out and the company gets its tooling costs back quick and doesn't have to keep stock in a warehouse for years. i think that's what we are seeing here with the tau and eldar GW want their money back quick and not have to carry lots of inventory. the logical conclusion to that would mean they could close all their stores and just sell direct on preorders(perfect world to them) but not really how the wargames world works but then GW do like to tell us how the wargames world should work

JWhex wrote:
@kroothawk: For sales, part time is down but full time is up.

Oh, how could I miss that full time jobs in sales increased from 1224 to 1010, even in the last year it went up from 1032 to 1010








And yeah, sales went down, revenue is flat (adjusted for inflation)

 Kroothawk wrote:

BryllCream wrote:The fact that they also increased the number of production staff and design staff makes me think that they don't expect themselves to go under any time soon.

Let's see:
P
Bad luck for you that I know who Hornby is. They produce model railroads! You don't want to tell me that Model railroads are a growing prospering market like tabletop games, right? It's like saying, GW outperforms most rival typewriter companies! Nice try but you have been exposed

Bad luck for you that you missed that a major part of Hornby's market is plastic model kits, ie Airfix, which is why I cited them as a comparison.

You're correct in that model kits, too, aren't picking up a younger demographic. But GW is also outperforming the stock market in general.

Stock market is not flat here in Germany.

Go on, make us all feel worse!

5 years into a recession, they are doing damned well. I get not many people care to much or are interested in business practice but if you survive a recession this big without going into loss making then you are doing fantastically and coming out of the other side they'll be doing better than ever. Aside from the usual nerd rage that accompanies every new codex (every month sigh, a downside to getting a new codex every month) and the schadenfreude GW haters there isn't anything particular to worry about.

Recessions are actually good for some companies/business sectors (takeaway food, cinemas for example), so saying "we're in a recession" is not relevant to a company's performance in of itself.

Gw's bread and butter is the us. Our recession ended four years ago. Gw has also come out and stated that they are 'recession proof'. Talkng up the economic climate in general terms is a bit too much of a free pass.

 Baragash wrote:
Recessions are actually good for some companies/business sectors (takeaway food, cinemas for example), so saying "we're in a recession" is not relevant to a company's performance in of itself.

A great example of selective bias.

Recession mean, on average, most companies' sales are flat. That is entirely relevant to a company's performance. GW shares have outperformed US companies in general, both on the DOW and NASDAQ.

http://uk.finance.yahoo.com/echarts?s=GAW.L#symbol=gaw.l;range=5y;compare=^dji;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

Recessions are not good for any business. If you have massive rises in unemployment, high inflation and less disposable income because of price freezes that means less money floating around in the economy. A recession proof business (that doesn't exist but just rolling with it) just means they can ride the drop in income easier than other businesses.

Nor was I giving GW a free pass. I said they haven't entered loss making, that is a positive accolade which marks them out as a very very strong business, particularly that they have a strong retail presence (one of the tougher industries) and they are a luxury item.

They have their financial house in order, the Black Library area is doing really well with good reason, I expect further expansion into different forms of Media and expanding the value of their IP.

By any objective analysis GW is doing well.

Edit: Also the idea that the USA's recession ended 4 years ago is a bit laughable. GDP growth started again thanks to a massive stimulus so yes be standard economic calculation they aren't officially in recession but they are in deep deep economic trouble and that isn't over yet. There actually isn't an end in site to the trouble facing all western economies, hopefully we'll see it soon.

 sourclams wrote:
Gw's bread and butter is the us. Our recession ended four years ago. Gw has also come out and stated that they are 'recession proof'. Talkng up the economic climate in general terms is a bit too much of a free pass.

And your next one is just around the corner.

cowen70 wrote:
Recessions are not good for any business. If you have massive rises in unemployment, high inflation and less disposable income because of price freezes that means less money floating around in the economy. A recession proof business (that doesn't exist but just rolling with it) just means they can ride the drop in income easier than other businesses.

Nor was I giving GW a free pass. I said they haven't entered loss making, that is a positive accolade which marks them out as a very very strong business, particularly that they have a strong retail presence (one of the tougher industries) and they are a luxury item.

They have their financial house in order, the Black Library area is doing really well with good reason, I expect further expansion into different forms of Media and expanding the value of their IP.

By any objective analysis GW is doing well.

Edit: Also the idea that the USA's recession ended 4 years ago is a bit laughable. GDP growth started again thanks to a massive stimulus so yes be standard economic calculation they aren't officially in recession but they are in deep deep economic trouble and that isn't over yet. There actually isn't an end in site to the trouble facing all western economies, hopefully we'll see it soon.

Actually, it is possible to objectively analyse GW as not doing well at all, it just depends what details you focus on and how you choose to interpret certain data.

As for "recessions are not good for any business" that is objectively untrue. As has already been stated, certain types of company historically do very well in a recession. Normally those that offer relatively low cost treats and luxuries that allow the consumer to make themselves feel better without requiring the sort of investment that a new car, house or even TV or stereo require. For a wargamer, a £20 box of plastic menz fits that niche spot on.

"Not make a loss" really isn't the fillip that you seem to think it is, recession or no.

 sourclams wrote:
Gw's bread and butter is the us. Our recession ended four years ago. Gw has also come out and stated that they are 'recession proof'. Talkng up the economic climate in general terms is a bit too much of a free pass.

In USA at least, tabletop is a growing market. GW revenue stays flat, so it is "boom proof" as well
Good for Privateer, Malifaux, Infinity, Godslayer, Dystopian Wars and all others that grow like hell. In my local meta, growth is also in non-GW tabletop games, while GW sales are shrinking.

BTW: USA is not the bread and butter of GW, North America is about as much as UK alone. Continental Europe is much more.

As long as GW "... continue selling more toy soldiers, at a profit, to people who are truly grateful." Then GW is safe

http://investor.games-workshop.com/chairmans-preamble-annual-report-2005-06/

Kirbyspeak is a magical thing.

And by "magical" I of course mean "terrible".

 Dynamix wrote:
As long as GW "... continue selling more toy soldiers, at a profit, to people who are truly grateful." Then GW is safe
http://investor.games-workshop.com/chairmans-preamble-annual-report-2005-06/

Oh, you quote the annual report that begins with "This year has seen both sales and profits decline."
This is good news!
BTW was that the year when GW took big loans to pay Kirby et.al. enormous dividends?

Some years ago when the LOTR mass marketing stopped and sales dropped, people called the beginning of the end. GW responded by raising prices to protect their margins. They've been doing it ever since and while revenue hasn't really grown in real terms, declining unit sales has allowed GW to cut costs while raising prices.

People have then predicted that prices will reach a point where demand is destroyed and their sales will tank in some sort of catastrophic way. Or that they'll reach the lower limit on what costs they can cut.

On the cost cutting side, GW has slashed its production staff (they're selling less product, so they don't need as many people making it) and drastically reduced its retail costs by switching to one employee operations.

This obviously cannot go on for ever. If you keep raising pricings and selling less product you can't survive with one employee making one kit and selling it to one individual for a hundred and fifty million dollars. That's obviously a silly hyperbolic example, but it shows that the direction GW is headed is not sustainable in the long term.

The debate is what the long term is. How long is long? 7 years ago, people were saying it was 5-7 years. That's obviously not true.

GW is carrying very, very little debt and still has good cash reserves. They no longer outsource any of their production process, so they have the tooling machines to keep making new moulds for new products. They've bloated a bit in administration, so that can be the next target for layoffs as well.

Enough people seem to be buying at the higher prices to keep revenue stable. We've seen from the court documents in the CHS lawsuit that GW sells less actual kits than we might think and they don't actually need to sell that many given their prices being where they are.

So my position is now that long term is actually really, really long. GW can certainly stay on this path of shrinking market share, falling unit sales and flat revenue long enough for the current management to retire super rich. Kirby already is a multimillionaire and the current method of operating just keeps putting more money into his pocket. He has no reason whatsoever to change the direction GW is heading.

Hivefleet Oblivion wrote:

 Baragash wrote:
Recessions are actually good for some companies/business sectors (takeaway food, cinemas for example), so saying "we're in a recession" is not relevant to a company's performance in of itself.

A great example of selective bias.

How so?

Hivefleet Oblivion wrote:
Recession mean, on average, most companies' sales are flat.

It means on average most companies' revenues are falling for two consecutive quarters,

If GDP falls 5% for two quarters and my business grows 5% is that good? Bad?

Good? What if on average the market my company is in grew 25% despite the recession? Still good?

Context is very important. Context for GW is that most of it's rivals are behaving in a manner that suggests business is growing (GW's is not, there's a good chance based on the financials that it's core model business is shrinking), and thanks to crowdfunding can circumvent one of the major features of the current recession - the inability of small businesses to get loans.

cowen70 wrote:
Recessions are not good for any business.

http://www.howstuffworks.com/10-recession-proof-businesses.htm#page=0

Further, people losing their jobs is one of the major drivers in people starting their own business.

cowen70 wrote:
particularly that they have a strong retail presence (one of the tougher industries) and they are a luxury item.

Only if the definition of "strong" is "they have lots of shops".

cowen70 wrote:
They have their financial house in order, the Black Library area is doing really well with good reason, I expect further expansion into different forms of Media and expanding the value of their IP.

This is true though.

cowen70 wrote:
By any objective analysis GW is doing well.

There is no such thing as an objective analysis of a company's financials, because people like me shovel as much bs as we possibly can into the financial reports. That's why there is an army of people employed as analysts across the financial sector trying to pull it all apart and figure out the best way to make their clients money.

frozenwastes wrote:

GW is carrying very, very little debt and still has good cash reserves. They no longer outsource any of their production process, so they have the tooling machines to keep making new moulds for new products. They've bloated a bit in administration, so that can be the next target for layoffs as well.

The only problem I have with this comment that their "good cash" reserves are mostly given away to their stockholders as dividends. We will see how big the profit actually is, and how much is PR slight of hand they are going to fluff the report.

Yes, the cash is used to pay dividends. Heck, GW even borrows money to pay dividends at times.

My point was that despite all GW's short sighted behaviour, they're not going to pay the price any time soon in a way that impacts the bottom line of the management of GW. Kirby is going to keep milking the customer base to line his own pockets until either it stops working or he's decided it's time to retire.

If things finally do hit the tipping point, I could see Kirby as his last act as CEO shopping GW around to larger game and toy companies and then retiring with a phat stack of shares in the new parent company.

I used to be one of the GW only has 5-7 years left crowd, but 7+ years has passed and I now appreciate just how right Kirby was about the customers being willing to pay more and more and more. GW may have given up over half of its market share, but their aggressive price hikes and mercenary treatment of their staff has meant that GW hasn't yet reaped what they sow. It's still a cash machine for Kirby and will continue to be so for quite some time. They can give up a further half of their market share, but if they double their prices, the revenue will stay flat and that's just fine for GW's management.

I also think there is room for higher prices. Just look at what they've been doing. $5, $7 or more for a single plastic infantry on a 1 inch base. And GW's revenue is still flat. Yes, less people are buying and they're buying less product, but enough are still buying to justify continuing on this path. I think we're heading to a point where the whole world gets the honour of paying more for GW plastic than what Forgeworld costs.

I think the financial success of Forgeworld and the transition of GW Australia into a profitable enterprise is being taken as clear signals that there is more room to raise prices even higher.

 Adam LongWalker wrote:
frozenwastes wrote:

GW is carrying very, very little debt and still has good cash reserves. They no longer outsource any of their production process, so they have the tooling machines to keep making new moulds for new products. They've bloated a bit in administration, so that can be the next target for layoffs as well.

The only problem I have with this comment that their "good cash" reserves are mostly given away to their stockholders as dividends. We will see how big the profit actually is, and how much is PR slight of hand they are going to fluff the report.

Given that it's part of an investors report I imagine there is as much PR spin as physically possible on it.

And another issue is that the "good cash" hasn't been from sales increasing but from cutting costs faster than sales fall. Most of that appeared to be Mark Wells doing, but shortly after praising him for doing just that he suddenly 'left', so I doubt there is any more costs to cut.

 azreal13 wrote:

As for "recessions are not good for any business" that is objectively untrue. As has already been stated, certain types of company historically do very well in a recession.

Liquor stores and bars, my friend. Liquor stores and bars.

 jonolikespie wrote:

And another issue is that the "good cash" hasn't been from sales increasing but from cutting costs faster than sales fall. Most of that appeared to be Mark Wells doing, but shortly after praising him for doing just that he suddenly 'left', so I doubt there is any more costs to cut.

There's loads more to cut. If you look at GW's staff numbers in their report, their administrative staff numbers have gone up and up and up while production and sales staff has declined. Any first year accounting student is going to see that at a meeting where the topic of discussion is "where can we save money?". Middle management and administration is the perfect place for GW to cut next.

Then, there's also the decreased costs of manufacturing and shipping which come along with further declines in units sold. If prices go up 10% and units sold drop by a proportional amount over a couple of years, you can cut a further 10% of your sales and production staff. Possibly even more.

GW will continue to brag in their annual reports about how they are protecting their margins (that is, jacking up prices) and improving efficiency (rewarding years of service with a pink slip). They'll keep giving up market share at the rate of half every 5-7 years and keep jacking up their prices until it stops working. I think it could easily be 10+ years before that happens. Kirby will be long gone by then and it'll be someone else's problem.


Automatically Appended Next Post:
The good news about GW surviving through voluntarily ceding market share through price increases is that it leaves fertile soil for new miniature companies to pop up and for existing smaller companies to get larger. The end result of GW's ongoing slide into irrelevancy is more variety and choice for the gamer.

It's bad if you're a fan of GW's models and games as it means higher prices to fund Kirby's dividend payments is a practice that is not going to stop.

 frozenwastes wrote:
They'll keep giving up market share at the rate of half every 5-7 years and keep jacking up their prices until it stops working.

IMO that rate will probably start to increase. GW's current business model involves high turnover, without a constant supply of new customers they will struggle to exist as most of their existing customers quit the game with nobody to replace them. And one of the biggest reasons GW is able to get those new customers right now is their position as the biggest game in the market. People tend to default to playing the game everyone else is playing (why WoW is so big, for example), so as long as they keep that critical mass they'll continue to get most of the new miniature wargame customers. On the other hand, once they slip below that point the answer to "what game are all my friends playing" is not going to be a GW game anymore, and those customers will go elsewhere at an increasing rate.

And of course this is on top of the sales they're losing over price increases/poor service/etc. Combine the two and the likely outcome is a constant decrease in customers up to a certain point (probably after the current management cash their retirement checks), followed by a much faster decline once someone else starts to take over the "default game" position.

You all must run the most successful businesses! Where can I buy your company stock!

 cincydooley wrote:
You all must run the most successful businesses! Where can I buy your company stock!

Oh good, the classic "you aren't a CEO of a major corporation, therefore you can't have an opinion" argument. Too bad it's still a bad one no matter how many times you repeat it.

 Baragash wrote:

Hivefleet Oblivion wrote:

 Baragash wrote:
Recessions are actually good for some companies/business sectors (takeaway food, cinemas for example), so saying "we're in a recession" is not relevant to a company's performance in of itself.

A great example of selective bias.

How so?

Hivefleet Oblivion wrote:
Recession mean, on average, most companies' sales are flat.

It means on average most companies' revenues are falling for two consecutive quarters,

If GDP falls 5% for two quarters and my business grows 5% is that good? Bad?

Good? What if on average the market my company is in grew 25% despite the recession? Still good?

Context is very important. Context for GW is that most of it's rivals are behaving in a manner that suggests business is growing (GW's is not, there's a good chance based on the financials that it's core model business is shrinking), and thanks to crowdfunding can circumvent one of the major features of the current recession - the inability of small businesses to get loans.

cowen70 wrote:
Recessions are not good for any business.

http://www.howstuffworks.com/10-recession-proof-businesses.htm#page=0

Further, people losing their jobs is one of the major drivers in people starting their own business.

Read your own link (I guess you haven't)


The global financial crisis of 2007-2009, however, rewrote the rules about recessions. Many economists are now saying that there's no longer such a thing as a recession-proof business. The best that employees can hope for is a recession-resistant job

And recession proof doesn't mean they don't feel effects just about every industry does. In GW case it relies on the fact that people love it so much they'll continue to devote dwindling disposable income towards the products anyway. But if people spend on average £50 less at Christmas time it might mean one less model bought instead of 3, the child will get 2. It always effects the bottom line marginally.

Recessions aren't bad things for economies and you always get start ups, often some of the biggest companies started in recessions but positing and posturing that somehow possibly the biggest economic crisis ever, certainly one of the longest isn't going to have an effect on GW business just means you are being silly.

cowen70 wrote:
particularly that they have a strong retail presence (one of the tougher industries) and they are a luxury item.

Only if the definition of "strong" is "they have lots of shops".

 Peregrine wrote:

 cincydooley wrote:
You all must run the most successful businesses! Where can I buy your company stock!

Oh good, the classic "you aren't a CEO of a major corporation, therefore you can't have an opinion" argument. Too bad it's still a bad one no matter how many times you repeat it.

No. It's just tiring hearing the same "blame Kirby blah blah blah nonsense".

It's a public company. Their goal is to return value to their shareholders. This includes Kirby.


Automatically Appended Next Post:

 Peregrine wrote:

 cincydooley wrote:
You all must run the most successful businesses! Where can I buy your company stock!

Oh good, the classic "you aren't a CEO of a major corporation, therefore you can't have an opinion" argument. Too bad it's still a bad one no matter how many times you repeat it.

You can have an opinion, but unless you've run your own business or been a part of a public company's decision making process, it means about as much here as it would for me to give le maz lessons.