GW Shares Drop As Operating Profit Falls Vs LY - NEW report for 1/2015 page 21

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**H.B.M.C.**

Wonderwolf wrote:
As armchair marketing guy (e.g. no qualifications whatsoever), I can't help but think these campaigns would've created more excitement, if they'd come out at the start and said... "listen, we're doing a huge Blood Angels vs. Tyranids campaign for the next 3 months, kicking off with Space Hulk... here's a first story/mission booklet (White Dwarf, download, etc..) to get you started and tease the story". Add store-run campaigns, etc.., off you go.

Instead, not even store managers seemed to know before the boxes arrived.

Ultimately, I am a bit sad. Stormclaw and Space Hulk didn't seem to have gotten GW out of its funk, which I can only assume means these formats go back to the endangered species list of GW products, and I actually thought they were some of the cooler 40K products in a while.

I couldn't agree with this any more than I already do.

Time and time again GW fail to leverage the strengths of their own brand, choosing either the fire-and-forget methodology (no synergy with big video game releases, like DoW and WAR), or the FineCast Curtain of secrecy (the aforementioned store managers being left in the dark until the day the stock arrives). The company seems almost at odds with itself, with various groups within the company working against one another (even passively).

They could have made a big deal of Space Hulk, the Shield of Baal stuff, and the eventual Blood Angel codex. Instead they launched it on anyone without so much as a day's notice (other than leaks), and seemed more interested in foisting the new BA Tac Squad on us by changing the BA rules to remove Assault Squads as Troops than they were in creating a cohesive multi-month launch even to both raise awareness and get people involved/invested.

It's sad really. Two big campaign releases and they best they can show for it is a spike in sales for a month. Yippee.

**RiTides**

Oh. The Space Hulk contents match up with the latest army releases, Blood Angels and Tyranids! I totally did not notice that... and heck, I'm paying attention to this stuff. The average consumer probably did not register that connection at all, since there has been little marketing along those lines.

Still hoping a few more reports like this will spur change at the company. We can only hope! My purchases have mostly moved on from GW for the last several years anyway, despite the fact that I spend a similar amount on wargames. Their profits are definitely trending down due to less market share and stiff competition that is catering to consumer's needs that GW can't/won't meet.

**lord_blackfang**

His Master's Voice wrote:
"Broadly in line", eh? That's always nice to hear.

They expected +6% and got -6%, it's just one little line of difference

**sand.zzz**

TheKbob wrote:
Also, their latest poster boys released is rumored to have no new units, changing the force organization to invalidate previous armies, and raising the price on core troops again.

Thats a terrible thing to do to your customers, and the benefits cant outweigh the damage it does. The only possible reason I could see them choosing this course is that they have their eye on the short term only. but the number of new models being released contradicts that. so who knows, maybe they really are just stupid.

**Azreal13**

sand.zzz wrote:
TheKbob wrote:
Also, their latest poster boys released is rumored to have no new units, changing the force organization to invalidate previous armies, and raising the price on core troops again.

Thats a terrible thing to do to your customers, and the benefits cant outweigh the damage it does. The only possible reason I could see them choosing this course is that they have their eye on the short term only. but the number of new models being released contradicts that. so who knows, maybe they really are just stupid.

What I'm going to refer to as "the Nephilim defence" going forward, applies here, if GW were really smart enough to use the rules to manipulate sales of new kits or those with flagging sales, then these units wouldn't be as bad as they are.

**sand.zzz**

H.B.M.C. wrote:
Wonderwolf wrote:
As armchair marketing guy (e.g. no qualifications whatsoever), I can't help but think these campaigns would've created more excitement, if they'd come out at the start and said... "listen, we're doing a huge Blood Angels vs. Tyranids campaign for the next 3 months, kicking off with Space Hulk... here's a first story/mission booklet (White Dwarf, download, etc..) to get you started and tease the story". Add store-run campaigns, etc.., off you go.

Instead, not even store managers seemed to know before the boxes arrived.

Ultimately, I am a bit sad. Stormclaw and Space Hulk didn't seem to have gotten GW out of its funk, which I can only assume means these formats go back to the endangered species list of GW products, and I actually thought they were some of the cooler 40K products in a while.

I couldn't agree with this any more than I already do.

Time and time again GW fail to leverage the strengths of their own brand, choosing either the fire-and-forget methodology (no synergy with big video game releases, like DoW and WAR), or the FineCast Curtain of secrecy (the aforementioned store managers being left in the dark until the day the stock arrives). The company seems almost at odds with itself, with various groups within the company working against one another (even passively).

They could have made a big deal of Space Hulk, the Shield of Baal stuff, and the eventual Blood Angel codex. Instead they launched it on anyone without so much as a day's notice (other than leaks), and seemed more interested in foisting the new BA Tac Squad on us by changing the BA rules to remove Assault Squads as Troops than they were in creating a cohesive multi-month launch even to both raise awareness and get people involved/invested.

It's sad really. Two big campaign releases and they best they can show for it is a spike in sales for a month. Yippee.

If they put out a release schedule it affords people the opportunity of planning their purchases. If you know your army is getting two new kits and a new Codex six weeks from now, then youre less likely to start that 2000 point Tyranid army over the next couple weeks.

**Herzlos**

Davylove21 wrote:
How has the strong pound messed it up for GW? Wouldn't that be a benefit?

A stronger gbp means foreign sales earned them less in gbp.

**Azreal13**

This is only based on casual observation, but I haven't noticed the US$ much outside the 1.6-1.70 range all year, and I probably check more often than your average geezer as I semi-regularly by stuff in $ instead of sterling.

This is in no way me stating a fact, there may have been a period of months where it was in the 1.90s I simply didn't have cause to check, but this simply doesn't ring true to my ear.

**weeble1000**

Herzlos wrote:
Davylove21 wrote:
How has the strong pound messed it up for GW? Wouldn't that be a benefit?

A stronger gbp means foreign sales earned them less in gbp.

As much as GW doesn't like it, a huge amount of its revenue comes from here in 'merica (

yea), where we are all power gamers and pig thieves.

But the gbp hasn't really moved much against the dollar, at least not to an extent, so far as I understand, to justify GW's presumably poor profits.

**Desubot**

weeble1000 wrote:
pig thieves.

Exsqueese me?

**Theduke07**

GW only cares about new player/new army purchase sales. Suckers like us still buying in are just the gravy.

**frozenwastes**

The most interesting thing will be the exceptional expenses. Like how they spent 4 million on the new website. And even more on restructuring. Those type of expenses aren't supposed to recur. So has revenue dropped so much that profits dropped 1 million + all the exceptional expenses? Or do they have new exceptional expenses and flat revenue?

**H.B.M.C.**

sand.zzz wrote:
If they put out a release schedule it affords people the opportunity of planning their purchases. If you know your army is getting two new kits and a new Codex six weeks from now, then youre less likely to start that 2000 point Tyranid army over the next couple weeks.

They don't want you to plan. They want you to BUY NOW. Not wait, not think, just BUY NOW.

GW's current business strategy is "encourage unthinking impulse buying", and we can all see how well it's working.

**warboss**

Desubot wrote:
weeble1000 wrote:
pig thieves.

Exsqueese me?

Read the most recent yearly report. The CEO actually referred to the case he brought against chapterhouse in which they lost or dropped 3/4 of the claims as failing not because of their lack of legal standing and preparation but because the US legal system was made to address things like porcine theft.... seriously. Ironically, the pumbagore was not on the list of supposedly infringing models.

Automatically Appended Next Post:

H.B.M.C. wrote:
sand.zzz wrote:
If they put out a release schedule it affords people the opportunity of planning their purchases. If you know your army is getting two new kits and a new Codex six weeks from now, then youre less likely to start that 2000 point Tyranid army over the next couple weeks.

They don't want you to plan. They want you to BUY NOW. Not wait, not think, just BUY NOW.

GW's current business strategy is "encourage unthinking impulse buying", and we can all see how well it's working.

A-Team's Hannibal would be very disappointed with their plan. The net effect of all their brilliant strategies seems to be having the opposite effect year after year. The only fat left to trim at GW is in their bone marrow and yet they're making less profit because they're simply selling less and less with each grand plan.

**Ehsteve**

Las wrote:
Can economics folks explain this a little more for us laymen? Is it a result of declining profits or does it have to do with the strength of currency?

Simply put: when a product is more expensive, people buy less of it. When your currency is strong, it is more expensive for other countries to buy your products.

i.e. If a pen costs £10GBP at an exchange rate of £1GBP=$1.5USD, that means the pen costs someone in America $15USD

If that exchange rate shifts upwards to £1GBP=$1.7USD, that means the pen now costs $17USD. That's a 13.3% increase in price for the exact same product (independent of inflation over time). The US customer can only budget for the same amount each order, so you buy 13.3% less pens or worse yet, they look for other suppliers of these pens (either similar or the same).

Unless you retain the foreign currency and your own weakens, you cannot effectively make any real gain from strong currency. However it does make purchasing items from weaker currency more inviting.

So a lot of factors affect profit. Strong currency can be one of them. In this case it would be fairly marginal, so it's not the whole story. Then again you rarely get the whole story from any of these reports.

**Azreal13**

All perfectly logical, but don't GW adjust their RRP in various territories, specifically because they claim to have been burned by these fluctuations in the past?

**Yodhrin**

sand.zzz wrote:
H.B.M.C. wrote:
Wonderwolf wrote:
As armchair marketing guy (e.g. no qualifications whatsoever), I can't help but think these campaigns would've created more excitement, if they'd come out at the start and said... "listen, we're doing a huge Blood Angels vs. Tyranids campaign for the next 3 months, kicking off with Space Hulk... here's a first story/mission booklet (White Dwarf, download, etc..) to get you started and tease the story". Add store-run campaigns, etc.., off you go.

Instead, not even store managers seemed to know before the boxes arrived.

Ultimately, I am a bit sad. Stormclaw and Space Hulk didn't seem to have gotten GW out of its funk, which I can only assume means these formats go back to the endangered species list of GW products, and I actually thought they were some of the cooler 40K products in a while.

I couldn't agree with this any more than I already do.

Time and time again GW fail to leverage the strengths of their own brand, choosing either the fire-and-forget methodology (no synergy with big video game releases, like DoW and WAR), or the FineCast Curtain of secrecy (the aforementioned store managers being left in the dark until the day the stock arrives). The company seems almost at odds with itself, with various groups within the company working against one another (even passively).

They could have made a big deal of Space Hulk, the Shield of Baal stuff, and the eventual Blood Angel codex. Instead they launched it on anyone without so much as a day's notice (other than leaks), and seemed more interested in foisting the new BA Tac Squad on us by changing the BA rules to remove Assault Squads as Troops than they were in creating a cohesive multi-month launch even to both raise awareness and get people involved/invested.

It's sad really. Two big campaign releases and they best they can show for it is a spike in sales for a month. Yippee.

If they put out a release schedule it affords people the opportunity of planning their purchases. If you know your army is getting two new kits and a new Codex six weeks from now, then youre less likely to start that 2000 point Tyranid army over the next couple weeks.

By the same token, if I know my army is getting two new kits and a new codex six weeks from now(or better yet, a few months notice), I'll still have my hobby budget to spend on them when they come out rather than having spent it with other companies or buying secondhand or OOP stuff on ebay. I'm not going to go into debt to buy plastic crack, so if I don't know what GW are going to be putting out in advance, the money I would have spent on their products goes elsewhere, and often by the time I get around to budgeting to buy that new thing that I could have been buying day-1 had I known about it has been out long enough that it's filtered down to the secondhand market, at which point why would I buy it from GW for three times the price?

We're constantly told by GW apologists that the online community are a tiny minority and nothing we do or say matters because most GW players just go to the store and joyfully empty their wallets onto the checkout counter, so how can said apologists also try to argue that allowing our tiny, insignificant group to know what's going on a few months in advance would irreparably damage GW's revenues?

**Azreal13**

It's a double standard that gets repeatedly abused.

Given the number of unique hits Dakka gets, the 11500 people who signed that change.org petition and the tangible effect that GW have been displaying in their income, I think it's fair to say that that state of affairs no longer applies.

**Jehan-reznor**

That means a price increase again and lots of "limited editions" coming soon, this good news!

**warboss**

You forgot fragmentation of the rules so they can sell you two books that have the combined utility your previous one had!

**agnosto**

frozenwastes wrote:
The most interesting thing will be the exceptional expenses. Like how they spent 4 million on the new website. And even more on restructuring. Those type of expenses aren't supposed to recur. So has revenue dropped so much that profits dropped 1 million + all the exceptional expenses? Or do they have new exceptional expenses and flat revenue?

Exceptional expenses/gains are applies after operating profit is calculated so the 1 million loss has nothing to do with that.

They're attributing the recent loss to an exchange rate that actually did climb the first half of the year to a high of 1.71 in July but has now dropped to 1.56 as of today. If that's all that's bringing them down, the January report better look all unicorns and sunshine. More often than not, these fluctuations between the currencies of two fairly stable economies kind of come out in the wash. That much of a loss inevitably hits the bottom line and GW is a small enough company that it's going to skew the year's numbers if they didn't rebound with increased sales in the 2nd half. This wouldn't be an issue at all if sales volume weren't already slumping.

I'm withholding my doom and gloom until January.

**Theophony**

Jehan-reznor wrote:
That means a price increase again and lots of "limited editions" coming soon, this good news!

The new limited editions will be sooooo limited they won't even be printed they will be electronic sent throught the new GW patented world wide webway. I think they are trying to hunt down the web creators now to get those pesky IP papers signed.

**Breotan**

warboss wrote:
Desubot wrote:
weeble1000 wrote:
pig thieves.

Exsqueese me?

Read the most recent yearly report. The CEO actually referred to the case he brought against chapterhouse in which they lost or dropped 3/4 of the claims as failing not because of their lack of legal standing and preparation but because the US legal system was made to address things like porcine theft.... seriously. Ironically, the pumbagore was not on the list of supposedly infringing models.

Profile rank updated.

**H.B.M.C.**

Yeah, so, a friend of mine's Shield of Baal arrived today. It was inside that fancy Christmas box GW made (for whatever reason). And that box was inside yet another box for shipping purposes.

So a box within a box within a box.

And we wonder why their bottom line is getting hit with such efficient product practices!

**Herzlos**

weeble1000 wrote:
But the gbp hasn't really moved much against the dollar, at least not to an extent, so far as I understand, to justify GW's presumably poor profits.

It hasn't. Certainly not enough to cause a 10-15% drop in profits, when the majority of it's sales are still in the UK in GBP. It's presumably just an excuse for why overseas sales are down (and definitely not anything to do with the pricing, competition or trade embargoes, no siree).

Yodhrin wrote:
By the same token, if I know my army is getting two new kits and a new codex six weeks from now(or better yet, a few months notice), I'll still have my hobby budget to spend on them when they come out rather than having spent it with other companies or buying secondhand or OOP stuff on ebay. I'm not going to go into debt to buy plastic crack, so if I don't know what GW are going to be putting out in advance, the money I would have spent on their products goes elsewhere, and often by the time I get around to budgeting to buy that new thing that I could have been buying day-1 had I known about it has been out long enough that it's filtered down to the secondhand market, at which point why would I buy it from GW for three times the price?

The GW strategy seems to rely on the customer not knowing anything else exists, or buying the new stuff anyway. I'm in the same boat though; I know about upcoming releases for my other games so money gets put aside for them.

**Barksdale**

Ehsteve wrote:
Las wrote:
Can economics folks explain this a little more for us laymen? Is it a result of declining profits or does it have to do with the strength of currency?

Simply put: when a product is more expensive, people buy less of it. When your currency is strong, it is more expensive for other countries to buy your products.

i.e. If a pen costs £10GBP at an exchange rate of £1GBP=$1.5USD, that means the pen costs someone in America $15USD

If that exchange rate shifts upwards to £1GBP=$1.7USD, that means the pen now costs $17USD. That's a 13.3% increase in price for the exact same product (independent of inflation over time). The US customer can only budget for the same amount each order, so you buy 13.3% less pens or worse yet, they look for other suppliers of these pens (either similar or the same).

Unless you retain the foreign currency and your own weakens, you cannot effectively make any real gain from strong currency. However it does make purchasing items from weaker currency more inviting.

So a lot of factors affect profit. Strong currency can be one of them. In this case it would be fairly marginal, so it's not the whole story. Then again you rarely get the whole story from any of these reports.

You are looking at it the wrong way. GW prices things in local currency. Changes in the exchange rate most often does not translate into an immediate change in prices. Using your example, the pen is priced at USD 15 and the initial exchange rate is GBP = USD1.5. So after a shift in FX rates to GBP = USD1.7, the price Stateside is still USD15. However, USD 15 at the new FX rate is only worth GBP 8.82 when that money is repatriated.

Anyway, the GBP/USD rate was over 1.7 in the middle of the 2014 and had been generally moving there since the beginning of 2013. Since July it has moved to about 1.55. Depending on how/when GW repatriates money I can see those rates having a big impact on their numbers That being said, I can also see a multitude of other reasons contributing to a decline.

**Bishop F Gantry**

H.B.M.C. wrote:
Yeah, so, a friend of mine's Shield of Baal arrived today. It was inside that fancy Christmas box GW made (for whatever reason). And that box was inside yet another box for shipping purposes.

So a box within a box within a box.

And we wonder why their bottom line is getting hit with such efficient product practices!

I wouldnt mind GW's high prices if everything in my codex was a viable choice, currently the quality or lack of quality of the rules is activly preventing me from expanding my Dark angels.

Whats in the box?

Boxception "BRHUUUM"

Our Blood angels hides in kardbard bawkses.

**The Division Of Joy**

ekwatts wrote:

Except that reporter is actually referring to Andrew Perloff, the chairman of Panther Securities and comparing him to Kirby.

I really don't see what any of these threads are really for, but weird porn for people who are obsessed with its imminent demise. GW do what they do and they sit right at the very top of the food chain. So what? They aren't really the same company they were in 1984, 1990, 1996 (thankfully) or 1999. So what? The whole gaming industry right now is in absolutely rude health from what I can see, and the internet has helped immeasurably. GW are simply too successful to fold; their profits are down a few million? Well, damn, they still appear to be making tens of millions more than many other companies. That does not spell imminent demise. And even though I'm not all that interested in GW miniatures anymore (though what I've seen the last few years actually looks pretty amazing, almost enough to tempt me back) their other products are brilliant, like the paints, brushes and quite alot of the terrain (the Citadel wood was the first GW model I'd bought in three years, and then I bought another four sets) so I'd be quite happy for them to stick around for another thirty years.

QFT, the first sentance is especially true on here

**rexscarlet**

Are GW UK and GW US separate?
How about GW and Citadel Miniatures, are they separate?
How about GW Retail Stores and GW Online Web-store, are they separate?
.
We have all seen the manipulations of the GW P&L, so nothing new, just quickly catching up with them.
.
Why I never bought GW penny Stock...
.
I bought 10k worth of this stock instead five years ago when it was at 11.5; https://www.google.com/search?q=pepco+stock&oq=pepco+stock&aqs=chrome..69i57.3507j0j7&sourceid=chrome&es_sm=122&ie=UTF-8

**Herzlos**

It's all the same company. They can probably hold money in a foreign currency though and the GBP value is just a calculation based on the current exchange rate.