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Surprised that there isn't already a thread, not surprised by the announcement.

https://s19485.pcdn.co/wp-content/uploads/2019/07/2018-19-Press-statement-final-1.pdf

I am pleased to report a third year of record constant currency sales, profit, cash generation and returns to shareholders. We enjoy setting
new records at Games Workshop and beating last year’s record beating year with an even better year highlights the progress we are making.
I’m sure next year will be just as exciting!
Our success has come from remaining true to our long-term strategy. We have once again delivered on our promise to produce and sell the
best fantasy miniatures in the world, engaging and inspiring our fans. In fact, in the year we engaged with more customers than ever before.
We continue to work hard, have some fun and make the Warhammer Hobby ever better.
Breaking records for three years in a row sets the bar higher and higher and so, to be realistic, I will continue to make no promises that we will
continue to grow. That said, I do not see anything significant that will get in the way. We will continue to deliver our operational plan, facing
any challenges head on. Our strong culture, built on teamwork and collaboration, continues to give ourselves the best chance of success.
Games Workshop is the best fantasy miniatures company in the world and the whole team are very proud of that. We are doing everything we
can to ensure we remain the best, forever.

Honestly this just mean price will hike more in the coming years.

Maybe I'll quit when troop box hit 100 USD.

I get the urge to bash, but try and keep it factually accurate.

The price hike happened after the books closed on this report.

 Azreal13 wrote:
I get the urge to bash, but try and keep it factually accurate.

The price hike happened after the books closed on this report.

The price had been increasing for the past 2 years, not the recently "inflation" adjustment.

Smaller kits with higher price, that is the real "price hike"

In a previous life as a salesman I was taught, in my training, that so long as you offered someone something they thought was valuable they tended not to quibble about the cost.

Yep, it's simple. GW will charge what they can, as long as people are willing to pay it. GW is seeing that there is a huge amount of elasticity in the budgets of their consumers - so they're cashing in on it, as they should.

Also they were price rising long before, we pretty much get to whine about it every year.

The fact that GW is making record sales 3 years in a row, esp when two of those years are marred heavily by Brexit concerns means that GW is doing very very nicely.


It's also fantastic for us gamers to see that GW is doing record sales when they've given us many things we've asked for:

Rules in AoS - and a single battle system - update still ongoing

Rules for the whole of 40K all at once.

Bringing back multiple specialist games - Adepticus Titanicus; Blood Bowel, Necromunda

Adding more specialist games - Killteam, AoS Underworlds, Black Fortress


Overall GW has created a new golden age for their brand and games and its really reaping the reward for gamers and them. That GW makes record profits in basically giving the market what the market wants is very encouraging. It means more chance of them supporting those specialist games into the lon term; devoting more resources to them; seeing rules rollouts like they've done for 40K and AoS become main themes not just a once-off. It means seeing more of what we currently like from them.



I'm also glad that they are upfront with the fact that this growth is not their sustainable end goal and that they expect there to be a downturn at some point. Considering that AoS is going through a big rules update that might well prolong this big upswing as more armies get Battletomes and thus become far more interesting to gamers. So I'd wager that they've likely got at least one more year of these record sales before things might ease off a bit.

AoS getting round to the Old Classics could pay significant dividends.

Those with existing Warhammer Armies now have a more rounded way to field them as the single armies they once were, rather than dozens of rather pointless deliberations.

That’s an easy shot in the arm in terms of people visibly playing AoS. And any game with visible players is more likely to bring in new players than one without it.

Chopstick wrote:

 Azreal13 wrote:
I get the urge to bash, but try and keep it factually accurate.

The price hike happened after the books closed on this report.

The price had been increasing for the past 2 years, not the recently "inflation" adjustment.

Smaller kits with higher price, that is the real "price hike"

But that's not it though, is it? "The Price Hike" happened a few weeks ago, ongoing price rises have been part and parcel of GW for years, so if that's what you were referring to your original comment was entirely self evident and utterly redundant.

We do "Self Evident and Utterly Redundant" quite well here on the Internet, thank you very much!

Some interesting stuff in the AR.

1. I think its interesting that their profits did not increase at the same pace as overall revenue. This tells me that there expenses were higher possibly due to expansion or reinvestment.
2. The number of independent retailers increased by 600 (12.8%) over the previous year. That is a very significant increase, though I doubt the majority of that increase is from new brick and mortar locations, but instead internet store fronts despite the supposedly inferior trading terms internet only retailers get.
3. Licensing revenues was also up double digits which gives further support that GW's IP remains in good demand.
4. The expansion of production and tooling is partially complete and will be finished sometime in the 4th quarter of this year. They are also renting a larger warehouse in Nottingham and increased the Memphis warehouse from 100k sq. ft. to 150k sq. ft.
5. They increased headcount by 21.6% (1,654 to 2,110) over the last 5 years or about 5% year over year. I am sure that includes retail employees as well as Nottingham and the Memphis and Sydney distro centers. Regardless, that employment growth like their income is exceeding the pace of the respective economies where they operate.
6. Web traffic is also healthy. They think they had 6 million unique visitors, 1 million more than 2018.
7. They also stated that the release of both Adeptus Titanicus and updated LoTR has exceeded their expectations.
8. It appears they averaged ~£25,660 (~$31,330 USD) per independent retailer vs ~£170,428 ($207,443 UDS) per GW store. BTW, this is a very simplified comparison and you would be grossly mistaken in assuming GW stores are making 5 times the profit of independent retailers. That said, I think there is little doubt that GW stores earn more profit for GW than the trade channel by virtue of the their continued existence and expansion. I think it also helps underscore for us the customer, that none of our LGS are getting “rich” off GW, so make sure to support your FLGS.
9. Online sales are growing more slowly than other channels and really are lagging. This probably the biggest negative in the whole report. To me, their online store is almost a necessary evil since it really is hard to drive sales to their online store. Some may say the easy answer is move more things to web exclusives, but the risk is they just end up decreasing sales through other channels and see an overall decrease. They also can’t compete on price vs. other online retailers who routinely off 15 to 20% off MSRP without undercutting same store profits.
10. I am still amazed at the density of GW stores in the UK vs. other markets. Notable milestone, the number of NA stores surpassed the number of UK stores for the first time, 153 vs. 140.
11. Gross margins declined attributed to the mix of new and existing product. This seems to be the smoking gun for the price increases to older kits.
12. Credit to GW for having a profit sharing program for those hard working one-person store managers as well as their ~£1,500 (~$1,825 USD) bonus to all their employees.
13. Earnings were up despite losing ~£0.8 million to exchange rate fluctuations.

Gobs of other interesting details about staffing and expenses, the cost of the expansion, inventory, pricing strategy and impact of price increases, etc.

Congrats GW employees for a great year! Your hard work is paying off (even if we grumble about paying for it! )

Arguably this has been perhaps the most disappointing year for GW in the last few years. Although they have made the highest income ever, what generally happens the world over with a company that is relatively stable (as the economy / population expands and currency devalues, costs inflate) then you should expect more income year on year even if selling the same products.

If we look at growth since 2015 (revenue) we have:-

2015 = -3.6%
2016 = -0.009%
2017 = +33.9%
2018 = +39.1%
2019 = +15.9%

Looking at profits, things are worse with only about +8% increase over the previous year. That's less than a £2 increase on the same type of models which isn't a reasonable amount given the current situation and price escalations.

What is interesting is where most of the growth is. They have a substantial increase in the trade aspects (+30%) with only modest growths in their own webstore(+5%) (I tend to ignore retail because it can be affected by opening and closures of stores that make it less comparable, though to be transparent this growth was about 40% (but only about £2-3m).).

Combined this would suggest that consumer are again starting to return to the trade market rather than GW direct (which I generally attribute to people looking to maintain their purchases with the same/less income). Although there has been some Asia growth so it is unclear how that affects these figures. This would help explain the recent price increase - doing this raises the margin both on trade and direct, but helps if more of your trade is shifting to 'cheaper' sources.

So I'd suggest that GW are sliding back into reduced growth (I assume it will stabilise at some point). Historically they seem to swing widely between large growth and slumping back. The question is whether they are now starting back into the 'slump'. Noting this in no ways makes them unprofitable just that the overeager posturing of the golden child previously by the market of huge growth is probably coming to an end. I've postulated before that if they have maintained the pre-Kirby madness slump then they should have profits around £100m by now. They are still very short of this. It is perhaps then that they haven't expanded their base but really just re-captured an equivalent number of people and we are looking at inflation growth only over the long term and the large growth is simply due to the readjustment after the Kirby madness.

40k's new version probably has also helped in the growth; it is not unsurprising that 2017 also provided a new burst to 40k that was desperately needed and reconfiguring armies to accommodate this probably helped sales (especially given the new range of marines). This period is probably now coming to an end.

As such I'd expect next year a further decrease in growth. The question then is whether GW resort back to the Kirby era of escalating prices to manage this (until it became unsustainable) or continue developing ways of expanding their appeal.

Can GW ever expect to make continual significant gains every single year? They serve a niche market and are honestly already the big fish in the pond by a very large margin in that market. To the point where they are the gateway product in many regions for that market.

They are certainly looking to secure their future markets through their school outreach programs and they also use licencing to reach into other related markets in order to spread more awareness of their brand and products.

However they aren't going to run into mainstream - the closest they got to that was Lord of the Rings and when the films died a lot of those mainstream customers vanished. It was a market GW couldn't chase and weren't prepared for nor were they prepared to film-hop all the time.

So in the end I think they will enter a decline in returns; they will still be profitable, just not the high flying profit maker for investors. They've also said several times that they would lower or manage their payments to shareholders to be more sustainable. I think GW managers saw that the company wasn't sustainable under the Kirby system. It was working, but at the same time was bleeding customers and their own products and company the whole time. IT was a system that was sustainable only in the short term and would eventually lead to rising costs of investment to dig itself out of a downward spiral (costs that I think they are feeling right now in this new period).

 Whirlwind wrote:
Arguably this has been perhaps the most disappointing year for GW in the last few years. Although they have made the highest income ever, what generally happens the world over with a company that is relatively stable (as the economy / population expands and currency devalues, costs inflate) then you should expect more income year on year even if selling the same products.

If we look at growth since 2015 (revenue) we have:-

2015 = -3.6%
2016 = -0.009%
2017 = +33.9%
2018 = +39.1%
2019 = +15.9%

Looking at profits, things are worse with only about +8% increase over the previous year. That's less than a £2 increase on the same type of models which isn't a reasonable amount given the current situation and price escalations.

What is interesting is where most of the growth is. They have a substantial increase in the trade aspects (+30%) with only modest growths in their own webstore(+5%) (I tend to ignore retail because it can be affected by opening and closures of stores that make it less comparable, though to be transparent this growth was about 40% (but only about £2-3m).).

Combined this would suggest that consumer are again starting to return to the trade market rather than GW direct (which I generally attribute to people looking to maintain their purchases with the same/less income). Although there has been some Asia growth so it is unclear how that affects these figures. This would help explain the recent price increase - doing this raises the margin both on trade and direct, but helps if more of your trade is shifting to 'cheaper' sources.

So I'd suggest that GW are sliding back into reduced growth (I assume it will stabilise at some point). Historically they seem to swing widely between large growth and slumping back. The question is whether they are now starting back into the 'slump'. Noting this in no ways makes them unprofitable just that the overeager posturing of the golden child previously by the market of huge growth is probably coming to an end. I've postulated before that if they have maintained the pre-Kirby madness slump then they should have profits around £100m by now. They are still very short of this. It is perhaps then that they haven't expanded their base but really just re-captured an equivalent number of people and we are looking at inflation growth only over the long term and the large growth is simply due to the readjustment after the Kirby madness.

40k's new version probably has also helped in the growth; it is not unsurprising that 2017 also provided a new burst to 40k that was desperately needed and reconfiguring armies to accommodate this probably helped sales (especially given the new range of marines). This period is probably now coming to an end.

As such I'd expect next year a further decrease in growth. The question then is whether GW resort back to the Kirby era of escalating prices to manage this (until it became unsustainable) or continue developing ways of expanding their appeal.

GW tends to follow growth with price rises and they end up pulling the rug out from under it and then just increase prices to drive revenue. People feel it most when its an old product that gets a new price tag but a lot of GW's price rise come in the form of a new kit giving less and costing disproportionately more than its predecessors and equivalents. Consistent with that its worth noting that their extra revenue this year yielded a greater profit, dollar for dollar. They're risk adverse to exposure from financing and they tend to bring up prices so they can pay down financed capital investments quickly. In this case they've opened US warehousing, expanded their factories, and opened 20+ new locations as a consequence of doing so well and then we get higher prices.

That said, I think much of their revenue growth has come from the increased tempo of releases more than anything else. Their plan to further drive revenue is more stores, more trade accounts, more releases. Its always been the case that the greatest amount of purchasing their new products see are in the first 3 months. More new releases in general means sustaining those peak volumes. I think GW should be focusing less on its own stores and more on independent retailers to optimize their profitability.

One has to remember that GW considers its stores advertising/recruitment centres as much as an income stream, so while I agree that they'd be realising a greater potential profit if they subsumed more risk to the independents and acted more like a manufacturer/distributor, that ship has long sailed and GW retail is what it is and is now a keystone to the business that could not easily be removed.

My only concern is, and has been for a while, whether they can maintain creative quality into the medium term. The increased tempo of releases must be increasing pressure on the design side, and while there's unquestionably a lot to explore, how much of that is commercially strong enough to support a release I'm less convicted about.


Automatically Appended Next Post:

 Alpharius wrote:
We do "Self Evident and Utterly Redundant" quite well here on the Internet, thank you very much!

Aye, don't I know it.

Giggled at the disparity between Australia and the rest of the world. Who could see that one coming

Well done to Games Workshop, I have enjoyed the hobby for well over 30years and I hope that I will continue for another 30plus years.

 Azreal13 wrote:
I get the urge to bash, but try and keep it factually accurate.

The price hike happened after the books closed on this report.

Let's be fair, the price rises never stopped. They just happened with each release. Trying to act like that isn't important information would be the opposite of accurate.

Which I addressed. Ongoing price rises are situation normal, the hike in the prices of a large percentage of the catalogue outside of a rerelease was an unusual event that landed outside the timeframe of the report.

Really no need to comment on that unless we're going to reiterate every other fact that anybody reading this thread is likely already aware of for reasons.

 Azreal13 wrote:
Which I addressed. Ongoing price rises are situation normal, the hike in the prices of a large percentage of the catalogue outside of a rerelease was an unusual event that landed outside the timeframe of the report.

Really no need to comment on that unless we're going to reiterate every other fact that anybody reading this thread is likely already aware of for reasons.

But there's no reason to think the latest price hike would have negative effect on profits since price hikes #1, #2, #3, #4, #5 etc before it didn't. Situation as usual.

 Azreal13 wrote:
One has to remember that GW considers its stores advertising/recruitment centres as much as an income stream, so while I agree that they'd be realising a greater potential profit if they subsumed more risk to the independents and acted more like a manufacturer/distributor, that ship has long sailed and GW retail is what it is and is now a keystone to the business that could not easily be removed.

My only concern is, and has been for a while, whether they can maintain creative quality into the medium term. The increased tempo of releases must be increasing pressure on the design side, and while there's unquestionably a lot to explore, how much of that is commercially strong enough to support a release I'm less convicted about.

I agree there are a number of reasons to have their own stores... It comes down to the fraction of players who adopt the hobby because of a visit to a GW store.
However I think one of the challenges is that in addition to having lower margins on their brick and mortar stores, whatever sales it takes away from independent retailers deprive GW of sales with a higher margin. When GW sell wholesale to retailers that's yielding a 30% profit margin. When GW sells it themselves, the price is bumped up another 30% to full retail and yields them only a 10% margin; that is to say when GW sells at its own retail store it's markup is close to 60% of the retail price and yields only a 10% return. To think of it another way, what would generate more sales and interest in their products a store or simply taking 50% off the price of certain products? You would think there is a lot of opportunity for something in between those two ways.


Automatically Appended Next Post:

tneva82 wrote:

 Azreal13 wrote:
Which I addressed. Ongoing price rises are situation normal, the hike in the prices of a large percentage of the catalogue outside of a rerelease was an unusual event that landed outside the timeframe of the report.

Really no need to comment on that unless we're going to reiterate every other fact that anybody reading this thread is likely already aware of for reasons.

But there's no reason to think the latest price hike would have negative effect on profits since price hikes #1, #2, #3, #4, #5 etc before it didn't. Situation as usual.

In the short run it did though. You go back to before the change in edition and their sales were pretty flat; revenue pretty flat, declining when taking inflation into consideration, where the only think that had them profitable for a number of years were a little more than their licensing royalties. Its why the previous CEO left. What price rises show now is that they don't really understand how this aspect of their business works, or they don't care. The advantage of mass production is the ability to leverage a reduced per piece cost to generate greater revenue and profit. GW does a lot to generate revenue and profit but they aren't really leveraging the advantages of being a manufacturer. If it takes 10,000 units of a product to break even, everything after that returns a greater profit... GW would rather sell only the 10,000 than to "devalue their product" and sell 20,000 for 10% less.

GW saw sales growth with the new edition because a lot of dissatisfied people came back to GW. At this point you almost have to believe GW's sales strategy is to chase people off so they leave the hobby just so GW can benefit from the bump in sales from someone getting back in fresh.

Being in the UK I suspect GW's head office just doesn't see reliable viability in the 3rd party store market at a national coverage level. The highstreet is a deathzoentoday and many stores are closing up, especially a lot of hobby stores. This doesn't mean they can't work, but there are a lot of towns where a 3rd party store is either not going to work or they are going to be in a tiny outlet buried in a backwater part of the town that basically won't get the walk-in-footfall in any great way.

I know there's a good few towns where 3rd party stores are tiny or have even close up and yet there's still a functional GW store on the street in an ok part of the highstreet (many have backed off from prime locations because those are typically very crippling)

Honestly I'm surprised that GW hasn't made a major deal to pair with a national food brand outlet and it wouldn't shock me if we saw that happen one day. Food is one of the few outlets that is surviving on the highstreet.

In £ notes, how much is a single GW share worth?

45 GBP?

https://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary/GB0003718474GBGBXSTMM.html

Its $58ish USD. The stocks list at 4,536, which I think is listed in pennies on the London Stock Exchange

Not £45. £4.50. Quite a fall actually, their highest not so long ago was up at £7-8 IIRC.

People still complaining about price rises, but I feel like the people who buy and play 40k are typically the types who don't quibble about five dollars here or there. I doubt they'd double their sales by having the prices be 10% less, and they do offer deals in the forms of army boxes and Start Collecting!

You're right, basically nobody quibbles about $5.

It's the second or third $5 increase for the same equivalent product that gets them. Or the people who live in the parts of the world where they're charged disproportionately more for the same thing, *and* are blocked from access to other markets where the price is cheaper. Or those who suddenly find their prices being converted into their domestic currency and inexplicably going up, even though the £ is in the toilet and buying from the UK should be really attractive and sales would logically increase. Or when their troop boxes cost a fortune because they've been priced at the rate of the Elite unit they also build. Or when the quantity of models in a box has halved but the price hasn't.

Simplifying it down to $5 here or there is doing the situation and any greivancd someone may have a disservice.

Personally I just decided that the lead games require too much money and time for a fairly bland gaming experience and went elsewhere to games I find more satisfying to play. That they're broadly cheaper is just a happy coincidence.

 Azreal13 wrote:
Not £45. £4.50. Quite a fall actually, their highest not so long ago was up at £7-8 IIRC.

can proably blame that all on Brexit worries.

Glad to see GW is doing well and while price increases are annoying, some products seemed fair as they were excellent value before the increase( Blue Horrors, Chaos Terminator Lord, Tau Stealth suits ).

That said, GW just needs to ensure that entry into its games is afforable for newcomers. They seem to do this well for the most part( Necromunda, Blood Bowl, 40K, AoS ), but there are some games that need better starting points( Adeptus Titanicus comes to mind ).

 Crazyterran wrote:
People still complaining about price rises, but I feel like the people who buy and play 40k are typically the types who don't quibble about five dollars here or there. I doubt they'd double their sales by having the prices be 10% less, and they do offer deals in the forms of army boxes and Start Collecting!

In business it’s the ones that don’t complain about the $5 difference and just walk away from the sales that you have to worry about. When parents trying to get their kids into a game see the price for 5 figures is the same as an x-box game and then they need multiple boxes, all the paints, brushes, glue, terrain, accessories and books to go with it which do you believe they will buy for their child? If they put it into a better price point they will get more sales because their customer pool will get much larger.

At this point 10% less is still more than the prices from the last few years were originally.