In a gaming market dominated by online platforms and video consoles, Games Workshop, the maker and retailer of table-top model war games, appears to be off in a world of its own.
Some 18 months ago, the City raised questions about Games Workshop’s long-term viability after difficult trading conditions forced it to issue a profit warning.
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But since then, Games Workshop’s focus on its niche business – one that sends its customers into the fantasy world of epic battles between armies of orks, elves, ogres and wizards – has helped it boost 2011 revenues 7 per cent year on year to £131m.
Although that figure is dwarfed by a UK video gaming market worth £4.7bn, it is sufficient to keep the group expanding internationally, aided by moves to replace unprofitable shopping centre stores with smaller, one-man outlets.
Since its profit warning in January 2011, Games Workshop shares are up about 80 per cent, compared with a relatively flat FTSE small-cap index. Last month the company reported full-year pre-tax profits of £19.5m, up 27 per cent, and raised its full-year dividend 40 per cent year on year.
While most companies would be shouting such figures from the rooftops, Games Workshop’s management prefer to let the numbers speak for themselves, and turned down four requests to speak to the Financial Times.
Uncharacteristically for a London-listed company, management do not make a habit of visiting the capital to chat to analysts and investors, preferring instead to host them at the company’s castle-themed headquarters in Nottingham.
“They decided that they were not going to come to London to see institutions or brokers. It became a bit too tricky,” says Jo Reedman, an analyst at Singer Capital Markets who used to cover Games Workshop when it acted as house broker.
According to a manager at one of Games Workshop’s London branches – who epitomised the company’s publicity-shyness by asking to remain nameless – the secret of the group’s success is customer interaction.
Unlike many video games that can be played immediately and just as quickly forgotten, Games Workshop sells a hobby that is both time-consuming and incorporates a sense of achievement.
“The idea is to make it all yourself – to put in the bases and glue [the figurines] together and paint them,” the store manager says.
For about £100, customers can buy the materials required to create their own fantasy world of demons, orks, and a multitude of other characters in its various dystopian sci-fi and fantasy universes.
My customer range is from 12 to 80 years old, from all walks of life. It’s a very mixed market
- London store manager
Its top selling product, Warhammer 40,000, has been on sale since 1987, and the company regularly releases books, expansion packs and additional materials to keep players coming back into its chain of 340-plus hobby centres worldwide.
According to the store manager, part of the group’s success in a highly competitive games market is not to compete directly with online and video gaming.
“A lot of our customers will do some online gaming,” says the manager. “Warhammer is more sociable than online or console gaming because you have to invest your time and effort in it and then play it with someone else.”
In Games Workshop’s 2012 annual report, Tom Kirby, chairman, wrote that the release of electronic games consoles such as the Nintendo Wii and Xbox 360 have had a negligible impact on the group’s sales.
“Each of these devices supposedly heralded the end for our antiquated miniatures – oh ye of little faith,” he wrote.
In spite of the 2011 profit warning, Games Workshop has proved to be relatively immune to the economic downturn, as the teenagers who make up the bulk of the company’s customer base tend to fund their purchases through pocket money and part-time jobs.
“My customer range is from 12 to 80 years old, from all walks of life. It’s a very mixed market,” says the manager, adding that in spite of the recession “people can always find a bit of money for their favourite hobbies”.
Games Workshop also holds a licensing agreement with New Line Cinema, tapping into the popularity of Sir Peter Jackson’s The Lord of the Rings trilogy by releasing a table-top game based on the films. It hopes to replicate that success later this year on the release of The Hobbit.
“The company has a strong line-up of product launches and this should ensure good progress. The rating looks attractive, particularly given the dividend yield of about 8 per cent,” says Charles Hall, analyst at house broker Peel Hunt.
“When we say that we are a long-term business we mean it,” Mr Kirby said in the annual report. “We cannot guarantee to be around in 50 years’ time, but we certainly intend to be.”

 Howard A Treesong wrote:
Why are they so shy though?

 Howard A Treesong wrote:
Why are they so shy though?

 Howard A Treesong wrote:
Why are they so shy though?

According to a manager at one of Games Workshop’s London branches – who epitomised the company’s publicity-shyness by asking to remain nameless – the secret of the group’s success is customer interaction.

 Noisy_Marine wrote:

According to a manager at one of Games Workshop’s London branches – who epitomised the company’s publicity-shyness by asking to remain nameless – the secret of the group’s success is customer interaction.

Must be hard to interact with customers when you are so busy being SHY.

I also like the part where they claim that consoles have had little to no effect on their sales.

 wowsmash wrote:
Don't these journalist even research anything anymore.

 KGatch113 wrote:


Sir Peter Jackson???? When was he knighted???

 wowsmash wrote:
I thought the 100 pound comment was off too. Don't these journalist even research anything anymore. You know the actual facts instead of slapping some words around.

 heartserenade wrote:
The secret is customer interaction? Really? They don't even acknowledge their customers on the internet exists.

 Lorizael wrote:

 wowsmash wrote:
I thought the 100 pound comment was off too. Don't these journalist even research anything anymore. You know the actual facts instead of slapping some words around.

It's £100 - £115 for what they sell as a starter bundle...

 heartserenade wrote:
The secret is customer interaction? Really? They don't even acknowledge their customers on the internet exists.

They have a website and a blog and FB pages and they can sell you stuff online. What else is necessary..?

For about £100, customers can buy the materials required to create their own fantasy world of demons, orks, and a multitude of other characters in its various dystopian sci-fi and fantasy universes

 MajorTom11 wrote:

For about £100, customers can buy the materials required to create their own fantasy world of demons, orks, and a multitude of other characters in its various dystopian sci-fi and fantasy universes

LOL

Are they seriously going to pretend 100 quid will do more than get you 1 painted unit if you are starting from nothing? Sigh...