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I think they should celebrate with a price rise!

H.B.M.C. wrote:I think they should celebrate with a price rise!

I have no doubt that announcement is incoming.

Redbeard wrote:We're in a recession. A company that sells luxury goods (economically speaking, not like Ferraris and yachts) is going to sell less during a recession. That they were able to remain profitable means they're making intelligent management decisions for the economic environment they're operating in.

Does anyone realistically expect a luxury good company to grow during a recession where unemployment is at 10% (or higher) and people are struggling just to get by?

I hope not!

And in that light, maybe it isn't all bad news for GW?

Assuming (uh oh!) that GW doesn't attribute their 'success' during these times to something that they shouldn't, and continue to make 'smart' decisions?

Er, never mind.

And after the price rise, reinstate shipping, making it proportional to how much you spend!

WarOne wrote:And after the price rise, reinstate shipping, making it proportional to how much you spend!

And then base price costs on effectiveness in-game, 'cause that makes sense.

I'm surprised Kan hasn't shown up yet, shield in hand, waving his GW banner high and proud.

Redbeard wrote:

Osbad wrote:I'm not sure whether the US uses a different term, but here it is total sales revenue for the year.

Ah, okay. I think we would call that revenue, or something like that.

The US calls it revenue too. Turnover is revenue over your average inventory which shows how many times you flipped your product during the year.

H.B.M.C. wrote:

I'm surprised Kan hasn't shown up yet, shield in hand, waving his GW banner high and proud.

Inspirational banners?

Redbeard wrote:Does anyone realistically expect a luxury good company to grow during a recession where unemployment is at 10% (or higher) and people are struggling just to get by?

In general, you're correct but beware sweeping statements.

Gucci Group NV reported revenue results for the first quarter of 2010. For the quarter, the company's revenue rose 4.7% to €894.8 million, with a gain of 9.5% at Bottega Veneta. Growth was driven by emerging markets, particularly China, and by leather goods.

http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ticker=GUCG:US

As an investor, I always expect companies that get my money to grow revenue. GW's doing what they can to remain attractive to investment and I can't fault them for that; however, cost-saving measures are a long-term bandaid and unless they can increase sales revenues, there's no point in investing in them. For the same reason you stated that we can't expect a company to grow in this economy, a price hike was a very bad idea; you don't increase ticket prices when your sales are stagnating or slumping, all that does is drive off even more customers. I would not be surprised if sales slump even further in the current quarter in response to the price hike; but they timed the hikes well with the release of 8th edition so the spike in sales there will help to cloud the overall picture so it will be harder to say the price hike caused a decrease. Issuing a dividend was a move to placate investors, kind of like throwing a party while the ship is sinking.

Overall, they've got some fairly savvy business-people working for the company so it's not as if the company will close shop within the immediate future.

agnosto wrote:

Overall, they've got some fairly savvy business-people working for the company so it's not as if the company will close shop within the immediate future.

And when they do sink, Hasbro will swoop on by and grab another gaming company and throw it into the jaws of oblivion (ya'know, not like run it into the ground, but make it a whore for mediocre products).

As to the 'Who buys luxury goods during a recession?' I've heard there's some hard data that movies and such actually did amazingly well during the US' Great Depression.

People delay big purchases (cars, houses, appliances, etc.) and don't take expensive trips, so they need some sort of escapism.

A five cent double feature in the depression is quite different than 50 dollars for three plastic toys. You could see movies for a year and not spend close to what you pay for one 40k army.

45p per share dividend is actually a pretty good return on investment for the shareholder.

GW's shares have just popped over the 400p mark so you are looking at 11% return.

They look a reasonable set of figures to me. They have more than doubled pre-tax profit, trebled the share earning, turned their balance sheet positive by a considerable amount and issued a dividend. They have obviously made themselves leaner, which is what all responsible companies should do when the economic climate is unstable and made what they have work harder for them. Sure they could have doubled their turnover but would that have doubled their profit? I doubt it. As the say "turnover for vanity, profit for sanity and cash is King".

H.B.M.C. wrote:

WarOne wrote:And after the price rise, reinstate shipping, making it proportional to how much you spend!

And then base price costs on effectiveness in-game, 'cause that makes sense.

I'm surprised Kan hasn't shown up yet, shield in hand, waving his GW banner high and proud.

And I'm not surprised you're making glib remarks about stupid things in a thread that has nothing to do with them.
Edited for personal comments. Knock it off, guys. -The Mgmt.
On topic:
I don't know enough about economics to really comment on what I read. I did like Osbad's graphs though, and am curious as to what their plan for veterans may be. They effectively recognized that most veterans have no interest in playing with the average playerbase at a GW official store(which is usually children being dropped off for the day), and provided a simple way for people to get tables and terrain for their own homes(albeit at a hefty price).

Kanluwen wrote:I don't know enough about economics to really comment on what I read.

I think you are in good company on this forum. But in short.

From a year ago...
Revenue is slightly up = good.
Cost of Sale is down = very good.
Op Expenses slightly down = good.
Overall profit way up = very good.
Net Assets way up = good.

Royalties down = bad.
Same store sales down = very bad.
Constant dollar sales down = bad.

Its all kind of a mixed bag. They financially are much stronger than a year ago, strategically I don't know if their position has changed much. Cost cutting is extremely important and it is working. To be making more money when sales are stagnant will be enough for Wells to keep his job. What they need to focus on (as Wells said) is growing sales. I think that is very difficult to do at their product's price point. In my opinion they have hit the elasticity boundary of the market and that market is pretty well saturated. If I were in charge (I don't think I need to say that I am not) I would hold prices at least flat if not slightly lower them over the next year to drum up excitement and sales.

I like GW, I want them to do well. But I think their prices are hurting their ability to compete as much as they are hurting our wallets.

Redbeard wrote:We're in a recession. A company that sells luxury goods (economically speaking, not like Ferraris and yachts) is going to sell less during a recession. That they were able to remain profitable means they're making intelligent management decisions for the economic environment they're operating in.

Does anyone realistically expect a luxury good company to grow during a recession where unemployment is at 10% (or higher) and people are struggling just to get by?

That kinda depends on your definition of "recession." Usually in the U.S. it's defined as two quarters of negative growth. I can't speak to other countries, but the U.S. economy's been growing for over a year now.

Still, the point remains that it's a slow economy. But the problem with thinking that it's all tied to macroeconomics is that GW's sales didn't boom during the strong economic growth in the middle part of the decade either. I tend to think that points to other causes.

gorgon wrote:

Redbeard wrote:We're in a recession. A company that sells luxury goods (economically speaking, not like Ferraris and yachts) is going to sell less during a recession. That they were able to remain profitable means they're making intelligent management decisions for the economic environment they're operating in.

Does anyone realistically expect a luxury good company to grow during a recession where unemployment is at 10% (or higher) and people are struggling just to get by?

That kinda depends on your definition of "recession." Usually in the U.S. it's defined as two quarters of negative growth. I can't speak to other countries, but the U.S. economy's been growing for over a year now.

Still, the point remains that it's a slow economy. But the problem with thinking that it's all tied to macroeconomics is that GW's sales didn't boom during the strong economic growth in the middle part of the decade either. I tend to think that points to other causes.

The Great Recession is really only hitting those on the fringes of the economy. It is not really affecting anyone that purchased what most would consider "luxury goods".

I think GW has a good business strategy for the future. They're making their business leaner and more efficient while marketing their IP. That's where the future of GW is. I can see a future in which GW breaks even, or even makes a loss, on the miniatures and game side so that they can market their IP for comic books, movies, video games, and other items. I remember reading a few years ago that this was Marvel's approach and I get the feeling that GW realizes that their IP is potentially much more profitable than anything they can physically sell and that by keeping the game alive and by running it at as low a cost as possible helps them transition to a company that exists to market an IP.

I would usually say that, despite my misgivings about GW prices, that things will continue as normal, the status quo will be maintained, and GW will be around to make more stuff to gouge our wallets with. Vets will bitch and moan, but then forget their hate when GW puts out the next shiny thing. I would usually have said that.

But now, GW's competition is much more mainstream. Things like Warmachine/Hordes and Flames of War have provided less obscure alternatives to the average gamer, which will entice the disillusioned GW "follower", since it is much easier to find other players for alternate game systems than it used to be. Admittedly, there have been some bumps in the road for the competition, such as Rackham (AT-43 seems to have been mismanaged, and there is no transparency so we really know nothing other than they are redoing the rules) and Catalyst (where's my Battletech Anniversary and Clan Box Sets?!?!).

Also, GW no longer holds a monopoly on top quality miniatures. Games like Infinity and Malifaux have also been making inroads with some spectacular miniatures. And PP has recently put forth some fantastic plastics.

And from what I can tell (read: I have no real data), D&D is making a comeback. My local gaming community forums seem to be more populated with people trying to get D&D campaigns than people looking for players for GW games. Maybe this has to do with the release of the D&D miniatures games or the fact that Heroscape is now D&D based...I have no clue.

If GW's goal is to be the only fish in the pond, it is failing miserably. Not only are there now more alternative fish in the pond, but the other fish seem to be larger than what GW is used to.

I will say, though, that with the Space Marine game coming soon, the Ultramarine movie coming soon, the 40K MMO coming soon, and the apparent success of the Black Library novels, GW's 40K IP is still very strong. Who knows...maybe 2011 will see a resurgence in GW sales due to it reaching out to the general public.

ArtfcllyFlvrd wrote:
From a year ago...
Revenue is slightly up = good.
Cost of Sale is down = very good.
Op Expenses slightly down = good.
Overall profit way up = very good.
Net Assets way up = good.

Royalties down = bad.
Same store sales down = very bad.
Constant dollar sales down = bad.

Its all kind of a mixed bag. They financially are much stronger than a year ago, strategically I don't know if their position has changed much. Cost cutting is extremely important and it is working. To be making more money when sales are stagnant will be enough for Wells to keep his job. What they need to focus on (as Wells said) is growing sales. I think that is very difficult to do at their product's price point. In my opinion they have hit the elasticity boundary of the market and that market is pretty well saturated. If I were in charge (I don't think I need to say that I am not) I would hold prices at least flat if not slightly lower them over the next year to drum up excitement and sales.

I like GW, I want them to do well. But I think their prices are hurting their ability to compete as much as they are hurting our wallets.

Thanks for this! Makes some good sense to me. Based on what I've read here, my impression is that while GW isn't going anywhere for the forseeable future (as in the next few years), the long term prognosis for the company doesn't look good as of right now.

I think you have some very valid points CaseyVa although I don't think they would want to sell the minis at a loss although a smaller margin may become acceptable.

I think it's only a matter of time before Hollywood becomes interested big time in the 40k universe. There is so much material to use and they would have an instant following. They just need to pitch it right, get the right Director, choose the right actors and Bob's your uncle.

Something GW could do to produce instant revenue would be to release a Space Hulk expansion LOL.

Wow.

I play a miniature wargame....It's a hobby.....that's it. That's as much as GW effects my life and family.

I can't even begin to understand why fellow hobbiests get this into this kind of minutia.....

It's like buying an airline ticket and knowing every CEO on that airlines board, their middle name, profit margin, and other information that has NO bearing on me, my hobby, or my life.....

Just always amazed at what people look into and get worked up over.......The way I sum up this kind of (useless) thread in regards to a simple hobby is (or the way I view the minds of those who get this deep into the background of the company) -

I eat cheese, the cheese industry is making less profit then last year, the cheese market is crashing, I'm going to stop eating cheese!

Well at the risk of sounding... grumpy...

This information is there for those who want it.

If people don't want it - no one's forcing them to digest it!

Well said spartanlegion. Now who stole my cheese?

spartanlegion wrote:Wow.

I play a miniature wargame....It's a hobby.....that's it. That's as much as GW effects my life and family.

I can't even begin to understand why fellow hobbiests get this into this kind of minutia.....

It's like buying an airline ticket and knowing every CEO on that airlines board, their middle name, profit margin, and other information that has NO bearing on me, my hobby, or my life.....

Just always amazed at what people look into and get worked up over.......The way I sum up this kind of (useless) thread in regards to a simple hobby is (or the way I view the minds of those who get this deep into the background of the company) -

I eat cheese, the cheese industry is making less profit then last year, the cheese market is crashing, I'm going to stop eating cheese!

Well said and thank you for saying it....

Cheers

spartanlegion wrote:
I play a miniature wargame....It's a hobby.....that's it. That's as much as GW effects my life and family.

I can't even begin to understand why fellow hobbiests get this into this kind of minutia.....

Many of us are quite vested in our hobbies. And, many of us know what happens to gaming systems when the company that operates them falters.

You cannot wargame without an opponent. People get older, they stop playing. New blood has to come in. And, if a game is no longer available, this happens faster, and new blood doesn't come in. The health of the company is directly related to the health of the hobby. This is why we care.

Redbeard wrote:The health of the company is directly related to the health of the hobby. This is why we care.

Spot on.

Redbeard wrote:We're in a recession. A company that sells luxury goods (economically speaking, not like Ferraris and yachts) is going to sell less during a recession. That they were able to remain profitable means they're making intelligent management decisions for the economic environment they're operating in.

Does anyone realistically expect a luxury good company to grow during a recession where unemployment is at 10% (or higher) and people are struggling just to get by?

This seems to come from an erronious assumption that GW is a Luxury product for the wealthy and seem to contain some of the elitist mentality that is plaguing the game/hobby. While GW's models are technically a luxury items they are by no means Ferraris or Porches and should not be priced as such.

GW is not kept afloat by the rich 1%, but rather the middle-class people that find their way into the hobby. In the current economy, middle class families do not have the cash flow to buy into the GW elitist club and their sales are showing such.

In business you are supposed to charge what the market will bear. You find this magical point by watching for where price increases correspond with a drop in sales revenue that breaks even. If the overall sales revenue drops, then you have passed the point of what the market will bear and should either hold the pricing, stable until the market shows signs of growth, or (gasp)reduce pricing to the point that the company begins to show sales growth again. GW has past that tipping point and shows every sign of another 10%+ price hike, this is poor business management.

GW doesn't think that its customers remeber the emergency price increase of 2007-2008 when material cost had gone up. Those costs came back down but prices remained up. GW has given the excuse that they were paying off debts for keeping the elevated prices. Those Debts/Asian factories have been paid off and GW is handing out dividends. They are profitable and have no dire need for increased revenue that would call for entropic price increases, yet they are still raising prices.

GW talks about protecting their IP but are creating their own problem with inflated prices that are the primary cause for why knock-offs and clones are becoming an issue. The only thing currently keeping many people from using knock-offs is their own paranoid guilt that someone at the local GW store will recognise the models as fake. GW needs to realize that their stores primary function is to provide a place to play and a source for reasonably priced models. Understaffed stores with reduced gaming area, overcosted models and restricted hours of operation are pushing players to find other venues in which to play. When customers are no longer playing at the GW stores they will feel more comfortable in using knock-offs. I'm pretty sure that most of us know some recasters that once their peices are painted, you can't tell the difference. What is GW going to do then? Scratch test random models? Yeah, that will go over well.

spartanlegion wrote:Wow.

I play a miniature wargame....It's a hobby.....that's it. That's as much as GW effects my life and family.

I can't even begin to understand why fellow hobbiests get this into this kind of minutia.....

It's like buying an airline ticket and knowing every CEO on that airlines board, their middle name, profit margin, and other information that has NO bearing on me, my hobby, or my life.....

Just always amazed at what people look into and get worked up over.......The way I sum up this kind of (useless) thread in regards to a simple hobby is (or the way I view the minds of those who get this deep into the background of the company) -

I eat cheese, the cheese industry is making less profit then last year, the cheese market is crashing, I'm going to stop eating cheese!

Spoken like someone who can afford both GW and cheese.

I'm old school. If a company is price gouging their customers I stop spending money on that company's product and try to help others realize that they are getting soaked unnecessarily.

Also, your analogy is off. If Kraft was saying that that because they make american cheese that you can't buy Land-o-Lakes or bordens versions and because Kraft copied other companies cheddar, swiss and Jack cheeses recipes that in general you couldn't eat any of these unless they are made by Kraft, then you have a starting point for a comparison.

Edit: spelling

Redbeard wrote:

spartanlegion wrote:
I play a miniature wargame....It's a hobby.....that's it. That's as much as GW effects my life and family.

I can't even begin to understand why fellow hobbiests get this into this kind of minutia.....

Many of us are quite vested in our hobbies. And, many of us know what happens to gaming systems when the company that operates them falters.

You cannot wargame without an opponent. People get older, they stop playing. New blood has to come in. And, if a game is no longer available, this happens faster, and new blood doesn't come in. The health of the company is directly related to the health of the hobby. This is why we care.

Well said Redbeard!

Anyone 'invested' in this hobby would do well to pay attention to its overall health - ESPECIALLY if you're thinking of 'investing' in a new army, or two!

Additionally, the health of the store chain and changes to their operation directly affects the hobbyists that regularly frequent those stores.

pombe wrote:I would usually say that, despite my misgivings about GW prices, that things will continue as normal, the status quo will be maintained, and GW will be around to make more stuff to gouge our wallets with. Vets will bitch and moan, but then forget their hate when GW puts out the next shiny thing. I would usually have said that.

But now, GW's competition is much more mainstream. Things like Warmachine/Hordes and Flames of War have provided less obscure alternatives to the average gamer, which will entice the disillusioned GW "follower", since it is much easier to find other players for alternate game systems than it used to be. Admittedly, there have been some bumps in the road for the competition, such as Rackham (AT-43 seems to have been mismanaged, and there is no transparency so we really know nothing other than they are redoing the rules) and Catalyst (where's my Battletech Anniversary and Clan Box Sets?!?!).

Also, GW no longer holds a monopoly on top quality miniatures. Games like Infinity and Malifaux have also been making inroads with some spectacular miniatures. And PP has recently put forth some fantastic plastics.

And from what I can tell (read: I have no real data), D&D is making a comeback. My local gaming community forums seem to be more populated with people trying to get D&D campaigns than people looking for players for GW games. Maybe this has to do with the release of the D&D miniatures games or the fact that Heroscape is now D&D based...I have no clue.

If GW's goal is to be the only fish in the pond, it is failing miserably. Not only are there now more alternative fish in the pond, but the other fish seem to be larger than what GW is used to.

I will say, though, that with the Space Marine game coming soon, the Ultramarine movie coming soon, the 40K MMO coming soon, and the apparent success of the Black Library novels, GW's 40K IP is still very strong. Who knows...maybe 2011 will see a resurgence in GW sales due to it reaching out to the general public.

Whether GW had lower prices or not would not have affected the now oversaturation of the market with competitors. The fact is GW has branched more into other consumer products such as games, books/comics, etc. 40k is more known by the general public than it has ever been, something competitors are simply unable to replicate. I will agree along with everyone else their price hikes are very annoying but the handling of their IP is still far and away superior to anyone else in the industry. Cash is King but the value of an IP is also very important to a company as it allows future, untapped revenue.