Forum adverts like this one are shown to any user who is not logged in. Join us by filling out a tiny 3 field form and you will get your own, free, dakka user account which gives a good range of benefits to you: No adverts like this in the forums anymore. Times and dates in your local timezone. Full tracking of what you have read so you can skip to your first unread post, easily see what has changed since you last logged in, and easily see what is new at a glance. Email notifications for threads you want to watch closely. Being a part of the oldest wargaming community on the net. If you are already a member then feel free to login now.

Here's a question:

If GW's sales have declined overall, but mail order sales have increased, doesn't the higher profit margin from mail order sales mean that fewer units were sold?

 Blacksails wrote:

 Ratius wrote:
So the sky still hasnt fallen right?.....

No, the skyline is still broadly in line with expectations.

Expectations are, however, apparently fairly low...


Automatically Appended Next Post:

weeble1000 wrote:
Here's a question:

If GW's sales have declined overall, but mail order sales have increased, doesn't the higher profit margin from mail order sales mean that fewer units were sold?

That really depends on how they funnel the money around internally. It's only an assumption that mail order results in more profit overall... at least while they're still paying for the stores that are making progressively less money as more and more product shifts online.

May they continue to sink. Well deserved outcome.

 reds8n wrote:
... Suspect the "non -core yet core" might cover the Hobbit/LOTR stream .. ?

More likely video games and any other licencing they do.

It makes me wonder... are all of their one man stores profitable? Are they actually swallowing costs we don't think they are, even after all of the corner cutting, just to maintain the appearance of success? I really wish I had more of an education in international business because there have to be a lot of things taking their pound of flesh out of Games Workshop for them to lose profits without any major problems occurring. They're huge, they have stores everywhere, their IP is a household name, and their customers are battered housewives. How is it exactly that they're losing money?

 Quarterdime wrote:
It makes me wonder... are all of their one man stores profitable? Are they actually swallowing costs we don't think they are, even after all of the corner cutting, just to maintain the appearance of success? I really wish I had more of an education in international business because there have to be a lot of things taking their pound of flesh out of Games Workshop for them to lose profits without any major problems occurring. They're huge, they have stores everywhere, their IP is a household name, and their customers are battered housewives. How is it exactly that they're losing money?

My understanding is the stores generate something like 30% of GWs direct revenue but cost 60% of their overall revenue to stay open, so on the hard numbers they should be dropped. The reason GW haven't is because before they were one man stores in low rent areas they were all closer to what we would now consider a small battle bunker in very high foot traffic locations such as malls. During this time they served as GWs first and foremost form of advertising and they did it well. GW keep them around because they expect the same benefits from one man in a closit off a side road.

 Quarterdime wrote:
They're huge, they have stores everywhere, their IP is a household name, and their customers are battered housewives. How is it exactly that they're losing money?

They don't give their customers any advance warning about what they're releasing, their most popular releases are only made in limited quantities, they've been making it progressively harder to buy an ever-increasing chunk of their product range, and they stopped putting any effort into writing coherent rules as they try to shift from being a company that sells games to being a company that sells high-priced collectibles - that look like wargaming miniatures instead of high-priced collectibles.



Having said that, it's really easy to play armchair CEO and say ;Yeah, they could be doing so much better if they just did what I want them to do...' For all we know, maybe there are actually sensible reasons for their behaviour over the last few years.

I have a bad feeling about the new warhammer, gives me the same feeling they did many years ago with EPIC; They gutted the game after a few good versions in hopes of bumping up sales, With over simplifying rules and removing any and all the details from the previous versions of the game. After firing Robin Dews the game never recovered; I can already see it six months from now.. The new warhammer comes out ...game tanks in sales and because they have to meet market expectations; no more warhammer fantasy, I am sure a few upper brass will get fired.. But that will help with head count numbers...

Here is something to get everyone's attention for the financial year 2014/15 I have been told that GW has bled more than 12 million pounds that following the 11 million pounds of the financial year of 2013/14 that is a decline in sales of 23 million pounds in two years.

The Australian Market is expected to rack up a decline of sales of the order of 2 million pounds.

GW is in free fall and can't stop the slide. It is in trouble.

 Achaylus72 wrote:
Here is something to get everyone's attention for the financial year 2014/15 I have been told that GW has bled more than 12 million pounds that following the 11 million pounds of the financial year of 2013/14 that is a decline in sales of 23 million pounds in two years.

The Australian Market is expected to rack up a decline of sales of the order of 2 million pounds.

GW is in free fall and can't stop the slide. It is in trouble.

I don't find this hard to believe at all but I'll ask for a source none the less?

 jonolikespie wrote:

 Achaylus72 wrote:
Here is something to get everyone's attention for the financial year 2014/15 I have been told that GW has bled more than 12 million pounds that following the 11 million pounds of the financial year of 2013/14 that is a decline in sales of 23 million pounds in two years.

The Australian Market is expected to rack up a decline of sales of the order of 2 million pounds.

GW is in free fall and can't stop the slide. It is in trouble.

I don't find this hard to believe at all but I'll ask for a source none the less?

An ex codex/games developer, that I can't name.

Ah, is it that time of year again where we all get back together, saunter to the edge of the fence, and continue to watch the horse corpse wither in the sunshine while a few of us take the 'ol bat out for a spin?

My favorite time of the year.

Also, I would have thought the vague flowery language would have been dropped with Kirby. Guess not.

weeble1000 wrote:
Here's a question:

If GW's sales have declined overall, but mail order sales have increased, doesn't the higher profit margin from mail order sales mean that fewer units were sold?

Sales and profits are different things.

If GW sell $100 through a shop, they make sales of $100. If the shop costs them $60 to operate and make that sale, their profit is $40.

If GW's webstore sells $100, it's sales of $100, but the profit might be $50 because the webstore only costs £50 to run to make that sale.

In either case the sales is still $100.

All figures have been made up for the sake of illustration.

 insaniak wrote:

 Quarterdime wrote:
They're huge, they have stores everywhere, their IP is a household name, and their customers are battered housewives. How is it exactly that they're losing money?

They don't give their customers any advance warning about what they're releasing, their most popular releases are only made in limited quantities, they've been making it progressively harder to buy an ever-increasing chunk of their product range, and they stopped putting any effort into writing coherent rules as they try to shift from being a company that sells games to being a company that sells high-priced collectibles - that look like wargaming miniatures instead of high-priced collectibles.



Having said that, it's really easy to play armchair CEO and say ;Yeah, they could be doing so much better if they just did what I want them to do...' For all we know, maybe there are actually sensible reasons for their behaviour over the last few years.

While it is easier in anything to be an "armchair expert" in anything - you are not that far off (I work with CEO's and help fix companies.....this one fits a pattern I have seen many times).

Clearly declining sales and profits are a sign you have a serious disconnect with your market - falling revenues are even more disastrous when have both increased new product introduction and raised prices - it means you are losing customers and they are buying less. Not a good place to be.

The really tragic part - is that their main problem is the both the easiest and most difficult to address - change management - the attitude of their leadership and the culture is has imbued in their company (go back and read a lot of their business reports and other published materials - its quite fascinating).

The amount of hubris in kirby's rambles is indicative of their core problem - they don't understand what people actually do with their beautiful models.

As their profits and revenues clearly show.

Awww! These GW annual reports are like waiting for Game of Thrones to get exciting. You always know that "winter is coming", but every year the story only seems to inch forward, just enough to keep you on tenterhooks. I'm just waiting for the year when the house of cards finally tumbles, Kirby gets eaten by dragons, and the corpses of disgruntled gamers finally rise-up, flinging themselves from the mile-high wall of prices to chow-down on the souls of wailing shareholders...

Maybe next season.

 Smacks wrote:
Awww! These GW annual reports are like waiting for Game of Thrones to get exciting. You always know that "winter is coming", but every year the story only seems to inch forward, just enough to keep you on tenterhooks. I'm just waiting for the year when the house of cards finally tumbles, Kirby gets eaten by dragons, and the corpses of disgruntled gamers finally rise-up, flinging themselves from the mile-high wall of prices to chow-down on the souls of wailing shareholders...

Maybe next season.

If anything, I doubt we'll see a huge collapse. It'll be death by a thousand cuts, which is kind of what we're seeing now. They'll whither and whither, store closures, price rises, market withdrawal, sales down, etc etc. continuing on for a few years. There's now too many games and systems out there that pull at the average gamers wallet. It'd be interesting to see what the UK club scene is like in terms of games played. I'd bet there'd be a good deal more variety than there used to be, especially with the X-Wing juggernaught alongside the other Star Wars games, DZC, CMON, Mantic, Warlord Games, Soda Pop, Inifinty, Spartan Games, Darklands, on and on. Fantasy in many ways represents one of their few last chances to re-rejuvenate sales. But, with a very competitive market for fantasy miniatures, it's going to be tough as they don't really have anything unique in terms of background any more, unlike 40k. When I look at WFB, I just see a grimdark mess. As an aside, has fantasy always been this Grimdark? I don't seem to remember it being so.

Kirby does not want to do any long term investment in the company, that is not the game plan.
Cannibalize assets as needed to ensure sufficient profits to roll-out dividends.
As long as he is still in a position to pay himself it will stay the course.
Once he cannot do that with some measure of certainty, he will leave.
That is around the same time portfolio minders will also lose interest and drop the stock.
Has any of his rambling stated some plan of "expansion" of any kind?
He is not giving a passing thought of GW's future other than his immediate needs.

Its my favourite time of year as seasoned business analysts do business with the ever thinner legion of white knights trying to explain that the story of the last few years is a slow motion train wreck while the white knights go nothing to see here people move along'.

My reading of this statement is that its setting the scene for some very bad news, which coming on the back pf several years of bad news. The company will npt have an 'end times'fallin one swoop, but it is increasingly struggling to adapt to a market that it doesnt understand. The excuses vary year on year, but if i were an investor at corporate level hearing the line about exchange rates (really because that is news to pretty much every other company out there in any kind of uk business), or staff (how long can they keep that one going), and restructuring (again, at some point i'd ask when the change bandwagon is over) then i would be getting very concerned now.

Fundamentally they need to realise that they've lost their market by simaltaneously annoying the old school hobbyists who are very loyal, and making it far too expensive for new entrants at a time when the market is more competitive than its ever been. Without a clue what their market is,they seem to think that there is an uncaring and unquestioning legion of buyers out there, who will buy until the end times.

If you look at the uk gaming scene over the last five years or so, its a story of masses of new and exciting systems and models. The days of GW being the only player in town are gone forever, and baring a massive change of direction (shutting the retail chain or mpving to franchise system) they are screwed. While people will say 'but they've said that for years',i dont think the companys financials have ever before shpwn over such a sustained period such a precipitous drop in income. It would be great if somone could do a graph showing what income has done in real terms for the last ten-fifteen years, as i sense this will show how bad it really is.


(Sorry for typos - am on ipad and have fat fingers!)

If this six month report is negative, it will be the fifth in a series of negative six month reports. In other words, two and a half years of falling sales.

Clearly that situation cannot go on for ever. Either GW will turn the corner, or the slow slide will suddenly become a fast slide down the pan.

The most worrying thing about each Chairman's preamble is that there is never any admission that there is a problem, or any ideas about what they are going to do to fix it. The fixes are purely financial; losing revenue? Reduce staff costs. There is no examination of why they are losing sales.

GW are not really known for being humble. Even Apple apologise when they've screwed up because they understand PR. GW haven't even acknowledged the problems with Finecast and still believe they were in the right over the CHS given Kirby's comments about how the legal system has been set up allowing people to steal their pigs or somesuch.

Smacks wrote:Awww! These GW annual reports are like waiting for Game of Thrones to get exciting. You always know that "winter is coming", but every year the story only seems to inch forward, just enough to keep you on tenterhooks. I'm just waiting for the year when the house of cards finally tumbles, Kirby gets eaten by dragons, and the corpses of disgruntled gamers finally rise-up, flinging themselves from the mile-high wall of prices to chow-down on the souls of wailing shareholders...

Maybe next season.

I'd be happy with a Red Board Meeting.

(And I might also spare a snigger for the reactions of the fans who never saw it coming and go 110% binky-bonkers over it)

Awww! These GW annual reports are like waiting for Game of Thrones to get exciting. You always know that "winter is coming", but every year the story only seems to inch forward, just enough to keep you on tenterhooks. I'm just waiting for the year when the house of cards finally tumbles, Kirby gets eaten by dragons, and the corpses of disgruntled gamers finally rise-up, flinging themselves from the mile-high wall of prices to chow-down on the souls of wailing shareholders...

This made my day !

More seriously, I fail to understand why GW is not trying to change its way and also why they keep going while they have an obvious issue with sales & profits. I guess it's some kind of biased organisational behavior that blind them, like it had happened so many times in History, Idk.

Financial reports seems bad (I'm not a marketing expert or a financial analyst but still) and erveryone in here seems to agree on that. Then I wonder if we are missing a point and GW actually have hidden ways to survive (exterior investments, Idk?) or if we are really witnessing its decline? How can such a company survive so long with so bad results, that's what I want to figure out?

That is easy to answer

Tom Kirby is the largest non-institutional investor, by quite a margin. He is a few years from retirement and he is not running the company for long term growth and success but as a short term method of generating cash.

Possibly he feels entitled because he "saved" GW by taking it public back in the day, I don't know, but if you view the last few years through the prism of someone doing their utmost to extract as much cash as possible with no concern for how grievously wounded they leave the company when they walk away, a lot of stuff starts to make a lot more sense.

GW has been trying to change their ways. The trouble is they have been going in directions that a significant number of players dislike -- IMO -- leading to falling sales.

The reason why they have survived so far despite is that they are still making a profit, partly due to cost reductions.

Their problem is that if their sales keep on falling, they can't go on reducing costs for ever, and at some point the profit turns into loss and then everything will fall apart quickly.

Possibly he feels entitled because he "saved" GW by taking it public back in the day, I don't know, but if you view the last few years through the prism of someone doing their utmost to extract as much cash as possible with no concern for how grievously wounded they leave the company when they walk away, a lot of stuff starts to make a lot more sense.

Then I guess it's the result of bad influence of shareholders at top level? Plus they have been "falling" from quite a few years and they seems to be more productive than ever regarding releases etc...

 Kilkrazy wrote:
If this six month report is negative, it will be the fifth in a series of negative six month reports. In other words, two and a half years of falling sales.

Clearly that situation cannot go on for ever. Either GW will turn the corner, or the slow slide will suddenly become a fast slide down the pan.

The most worrying thing about each Chairman's preamble is that there is never any admission that there is a problem, or any ideas about what they are going to do to fix it. The fixes are purely financial; losing revenue? Reduce staff costs. There is no examination of why they are losing sales.

Bingo. Give this man a cigar.

While it's true that most companies try to spin the negative to appear less than it actually is, the difference with GW is that the Board and CEO fail to even admit there is trouble. They attempt to apply a little handwavium (tm) and just say that the negative numbers are due to exchange rates or the restructuring of their retail stores which benefit from being a partial truth. If you scratch the surface of the reports though, you realize that GW is a company in serious decline, nearly Radio Shack levels of decline and management is strumming the proverbial fiddle while Rome burns around their ears. When this all started, they benefited from some real cost-cutting measures, doing things that really needed to be done but as time went on, they trimmed the fat and kept cutting into the bone, reducing their retail arm to a shadow of its former self and unable to compete with even local FLGSs.

What was their answer to financial distress? Throw gack at the wall and see what sticks; out came rapid releases of products that enthusiasts have been crying out for years to get their hands on (knights, skitarii, warlord titan, etc.) but I would hazard a guess that it's too little, too late. Many collectors have left due to the previous glacial release cycle and many more gamers have left due to the confusing mish-mash of rules, frequent invalidation of army books (requiring further book purchases) and the sorry state of the game as a whole. They're unable to attract new custom due to their stores being relocated to shady areas, under bridges (every time I cross the bridge, the GW troll comes out and tries to sell me a $20 miniature) and a price point that is extortionately high when compared to the competition. The company performs no advertising outside of their own magazine and no marketing of any stripe and so depends on word of mouth to attract new customers; and now word of mouth is overwhelmingly "stay away."

So, no, GW management has no idea why things are bad; undoubtedly they know it's bad though. I wonder what became of that Customer Experience position that they posted last year; if that person is happily traveling the world, being mugged in dark alleys to reach the GW store in the back corners of the cities in which they are located, and whether this person will report the truth, that customers are not happy and are voting with their wallets or simply toe the company line and say, "everything is awesome." (earwig, now you're going to be singing that song all day)

I will say that Kirby is the only reason the company has lasted this long, on the course that they've taken. I think that they would have fallen ingloriously years ago if he hadn't come and trimmed the corporate fat (and their was some) but he simply didn't know when to stop and hand the reins over to someone who could construct a leaner but creative and advancing corporate structure and philosophy. This is the problem with incestuous companies like GW who don't look outside themselves for new ideas to stay fresh and relevant.

 Quarterdime wrote:
They're huge, they have stores everywhere, their IP is a household name....

1. They're only "huge" relative to other tabletop miniature game makers.

2. They have stores everywhere in the UK, and that's about it.

3. No, it's not. If you're not already a tabletop gamer, you've probably never heard of Games Workshop or any of it's affiliates. I'd honestly be surprised if, outside of the UK, more than 5-10% of households have a single member who would recognize the Games Workshop name.

The fact of the matter is that they're the manufacturer of a niche, luxury item that caters to a very small market relative to the market as a whole.

It's kind of a household name, for certain households. Like I imagine a pretty high percentage of 30-50 year old guys in the UK "used to play that warhammer" from when it was a high street name (as in, you could buy 40K/HeroQuest/BloodBowl in most towns). For their target market? Not so much.

The world of business as GW sees it:

Advertising is bad. The less people know of your new product, the more people will buy it.

If high prices are restricting sales, then the solution is even higher prices.

If a popular product is selling well, stop selling that product

If your customers are asking for X, give them Y

 Kilkrazy wrote:
If this six month report is negative, it will be the fifth in a series of negative six month reports. In other words, two and a half years of falling sales.

Almost certainly a lot longer than that by several years, its only recently that GW's revenues have been falling faster than their regular price rises could mask.