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Q: when is growth not actually growth?
A: when it's on dakka of course!

The wargaming market as a whole is irrelevant, as gw is a mainstream company - probably 90% of their customers don't know or care about other miniature companies. You May as well say that a huge New call of duty game makes the Sims less popular because computer gaming as a whole has grown.

That's another box ticked...

Left Hand of the Pheonix wrote:
Thank god I'm a trained accountant who can understand all those numbers. From my viewpoint GW is in an good place, but there are some areas to be adressed.

As an accountant who spent 9 years at UK retailers, I disagree, and your post is a good example of what I've been saying for years about GW's results (that their reporting strategy is to flatter their investor-centric metrics so that any quick glance paints a good picture).

As someone else pointed out, there's a disconnect/shift between adjectives used in reports, using "mixed year" really means they consider it "bad", because really it says "it was a mixed year even after we manipulated everything we possibly could to make the numbers as positive as possible".

I would speculate that if the revenue were stripped back to the core business (pre-royalties, no BL, no FW, separate Direct sales*), there would be an even more dramtically declining trend over time. And this is really the crux of why I disagree with your top line comment - GW is showing sustained decline in it's core business, even this year with it throwing "flag ship" products at us at an unheralded rate. I think there have to be exceptional circumstances for a company with a medium-term decline in it's core business to be branded as "good", especially when anecdotal evidence is that they are underperforming the market.

Where we do agree is that GW's financial position means that it's not a case of the ship being holed below the waterline and everyone get the hell out, it has a strong position from which to address the issues.

*Because whilst it's great that an area of the business is showing growth, if it's a result of channel canabalisation it's not really that good a thing, especially when it's moving out from your highest fixed cost base when it is your publically stated strategy to continue down that fixed cost base path.**

**I'll caveat this by saying that for the 4 years I was a red shirt, mail order sales placed in store went through the store till, and therefore appeared in the store sales. I haven't placed an in store mail order for years so I don't know if this is still the case, if it's not then there's probably a good case not to exclude Direct Sales because we can't really say what the effect of GW's in-store range rationalistion is.

 Baragash wrote:
t, mail order sales placed in store went through the store till, and therefore appeared in the store sales. I haven't placed an in store mail order for years so I don't know if this is still the case,.

Is in the UK.

The knee-jerk response from outsiders is nearly always either you are doing it wrong or you will fail. Neither is true.

If that's not a dig at Dakka, then I don't know what is!


Automatically Appended Next Post:

 BryllCream wrote:
Q: when is growth not actually growth?
A: when it's on dakka of course!

The wargaming market as a whole is irrelevant, as gw is a mainstream company - probably 90% of their customers don't know or care about other miniature companies. You May as well say that a huge New call of duty game makes the Sims less popular because computer gaming as a whole has grown.

Strangely, I find myself agreeing with you.

I remember people saying in the 1980s that GW was doomed.

I remember people saying in the 1990s that GW was doomed

I remember...you get the gist.

I'm always ready to criticise aspects of GW (whilst praising others) but they're still around, still selling, and still making people happy. A small minority gnashing their teeth on dakka won't change that.

 Baragash wrote:

Left Hand of the Pheonix wrote:
Thank god I'm a trained accountant who can understand all those numbers. From my viewpoint GW is in an good place, but there are some areas to be adressed.

As an accountant who spent 9 years at UK retailers, I disagree, and your post is a good example of what I've been saying for years about GW's results (that their reporting strategy is to flatter their investor-centric metrics so that any quick glance paints a good picture).

As someone else pointed out, there's a disconnect/shift between adjectives used in reports, using "mixed year" really means they consider it "bad", because really it says "it was a mixed year even after we manipulated everything we possibly could to make the numbers as positive as possible".

I would speculate that if the revenue were stripped back to the core business (pre-royalties, no BL, no FW, separate Direct sales*), there would be an even more dramtically declining trend over time. And this is really the crux of why I disagree with your top line comment - GW is showing sustained decline in it's core business, even this year with it throwing "flag ship" products at us at an unheralded rate. I think there have to be exceptional circumstances for a company with a medium-term decline in it's core business to be branded as "good", especially when anecdotal evidence is that they are underperforming the market.

Where we do agree is that GW's financial position means that it's not a case of the ship being holed below the waterline and everyone get the hell out, it has a strong position from which to address the issues.

*Because whilst it's great that an area of the business is showing growth, if it's a result of channel canabalisation it's not really that good a thing, especially when it's moving out from your highest fixed cost base when it is your publically stated strategy to continue down that fixed cost base path.**

**I'll caveat this by saying that for the 4 years I was a red shirt, mail order sales placed in store went through the store till, and therefore appeared in the store sales. I haven't placed an in store mail order for years so I don't know if this is still the case, if it's not then there's probably a good case not to exclude Direct Sales because we can't really say what the effect of GW's in-store range rationalistion is.

QFT. For months I have said that GW is going to show a profit and they did. But at what cost to the company? From a business standpoint Your comments echos my own.

I'll perhaps post more on this later.

 BryllCream wrote:
The wargaming market as a whole is irrelevant, as gw is a mainstream company - probably 90% of their customers don't know or care about other miniature companies. You May as well say that a huge New call of duty game makes the Sims less popular because computer gaming as a whole has grown.

I disagree, it shows there's a huge growth in tabletop gaming, but none of it is going to GW. That means there's a growing group of people that GW are failing to monetize. The fact this is happening whilst the majority (your 90%) of GW's customers don't even know about the rest of the market is even worse; it's indicating that those that do discover the competition (the other 10%) are spending like mad, but it's all going to GW's direct competition.

There's also the usual risk about losing market share, especially in a peer driven hobby, and that's in reduced exposure and recruitment. If all your friends play X-Wing, how are you going to get into 40K?

Herzlos wrote:


There's also the usual risk about losing market share, especially in a peer driven hobby, and that's in reduced exposure and recruitment. If all your friends play X-Wing, how are you going to get into 40K?

Exactly, and that's where GW seems to have lost the plot.

I think people overestimate the slice of the pie in this market outside GW, especially the Kickstarter part.

Kickstarter was founded in 2009. In these four years since Kickstarter went life, a total of US$140.61 Million (GBP 92.49 Million) were pledged to successful projects in the "Games" category (which includes Computer Games (e.g. Star Citizen, etc..), Board Games, Miniatures Games, Card Games, everything...)

Games Workshop's Preliminary Revenue in the 2012-2013 financial year alone was GBP 134.6 Million.

They took in more money last year than ALL Kickstarter-projects related to gaming in the history of Kickstarter.com.

Yup, they are definitely still by far the biggest player, but it's facing a growing number of competitors which are themselves growing in size. Whilst I'm sure GW probably employs more staff than all of it's competitors combined, they are all growing at a huge rate whilst GW is declining slowly. That trend can only carry on for so long before GW stops being the big fish.

They'll still be the dominant market force for at least another 5-10 years I reckon before someone else becomes the default gateway company.

Every year we have this come up and every year we get a few people who like to complain that anything that points out problems with GW's business plan is somehow "gnashing their teeth" and forecasting "doom".

News for you guys - No we aren't!

I'll let others speak for themselves. For myself it's just an attempt to get behind the corporate-speak, and understand how GW, the largest toy-soldier company in the world, is really doing, and how that may impact on my own hobby.

Personally I have very little interest in their games any more, and only retain an interest in their doings because they seem to have a very ...... unique ..... business model which I am interested in seeing pan out over time.

I did predict back in 2004 that they would crash and burn in 2008 or so. Fortunately they avoided that calamity due to favourable exchange rate gains which boosted their US-based profit, and also some exceptional licencing revenues.

Since then I have never predicted anything, as their strong cash positive position means they are pretty immune from any short term issues. So I am more interested in what the numbers are really saying about the number of people around the world buying their stuff and whether that implies the "GW Hobby" is growing or not.

On the one hand we see lots of (to us) strange decisions re pricing, relationships with various overseas markets, independent traders etc. which seem like they will affect things one way, and on the other we know that there are a lot of frothing fans out there who seem to be prepared to sell a kidney in order to buy the latest plastic crack.

The publication of the audited annual results is the best chance we have of analyzing the results for ourselves with any sense of objectivity. GW management of course will always try to put the most positive spin on things. Only the most naive of readers would not try to "de-spin" the report and so take everything as the Gospel of St Kirby as God's honest truth!

A lack of naivity does not necessarily make for a Cassandra-esque doom monger!

(Although thinking about it, Cassandra was in the end proved right....)

"Finding new places at attractive rents for our stores is not plain sailing, but is not as hard as finding the
right people to run them in the right quantity. We have yet to get this as right as we would like and our
new store openings in the period (net 6, 46 openings and 40 closings) is a reflection of that difficulty.
In an ideal world we would be opening 40 or 50 net new stores every year.

If we are opening stores to pursue sales growth, then why close any? Over the past decade we had
accumulated several stores that didn’t work out, usually because the rent was too high. We are closing
these as fast as makes sense. Sometimes it is more cost effective to pay to be released from our
lease and sometimes it is better to wait for the end of the lease. This is a process that is mostly
restricted to North America (and the USA, not Canada) and should be largely complete by the end of
the year to May 2014. "

They claim that they are closing stores because of rent, not because of their employees. If it is so hard to find good people as they say, then why not take the employees from the stores that are closing and staff new stores with them? When a GW store closes in the US, the staff have to reapply for jobs. They are not transferred. Most of course are not rehired.

I attribute their store closings to faltering demand in a given geographical market. GW slashes and burns. They vacate and move on to new pastures.

What happens when GW move out is that FLGS open and other games are played. GW have terrible games for new hobbiests. Games like Malifaux and Warmahordes are much more accessible.

Koppo wrote:
Hang on..

Earnings per share of 51.5p (2012:46.8p)

Dividends per share declared in the year of 58p (2012: 63p)

Does that not mean that GW went in to debt and borrowed money (at interest) to pay dividends? Or did this come from some cash reserve?

Short answer. No.

 Alpharius wrote:
That's another box ticked...

Is it time to change the batteries in my smoke alarms already? We should just make a 'Annual Report thread template' and post it everytime one of these comes up.

 Surtur wrote:

 Kroothawk wrote:
BTW can someone explain, why £ 134.6m in constant currency at 2.7% inflation is £135.6m and not £130.9m?

Because I think someone forgot which number to multiply. But yeah, my math of using 2.7% inflation (British inflation) makes the revenue to be flat. I think a keen investor should be scratching their head on that one because according to GW "Fine"ancial report, they experience .7% DEflation.

Guess the GW accountant had the right attitude then
But 2.7% more revenue at 2.7% inflation rate looks flat to me.
As I said some time ago: If GW needs to double its prices to keep revenue flat, they are indeed in dire straights.

Jack_Death wrote:

Koppo wrote:
Hang on..

Earnings per share of 51.5p (2012:46.8p)

Dividends per share declared in the year of 58p (2012: 63p)

Does that not mean that GW went in to debt and borrowed money (at interest) to pay dividends? Or did this come from some cash reserve?

Short answer. No.

Are you sure, the preamble was appended after I posted (or after I started to post anyway) and includes this

The fact that we have been paying a lot of surplus cash out as dividends hasn’t put them off! We’ll see what happens when we have a bad year and stop.

Which would indicate that the answer is "No and yes". That surplus was not generated this year as earning per share was less than dividends, neither was it generated last year as again earning per share were less than the dividends. So this surplus must be somewhere and must have been generated at least 2 years ago.

If the company make £1 in earnings for every share in issue and gives £2 in dividends for each share in issue then money out is greater than money in, so it must either come from some pot or be loaned from somewhere.

Unless I am missing something here (corporate finance is not my strong suit).

 spaceelf wrote:

They claim that they are closing stores because of rent, not because of their employees. If it is so hard to find good people as they say, then why not take the employees from the stores that are closing and staff new stores with them? When a GW store closes in the US, the staff have to reapply for jobs. They are not transferred. Most of course are not rehired.

Of course the staff are not transferred.

That costs money on both the employee and employer's end. How many people do you think are willing to move to work what amounts to a minimum wage job?

 Kroothawk wrote:

 Surtur wrote:

 Kroothawk wrote:
BTW can someone explain, why £ 134.6m in constant currency at 2.7% inflation is £135.6m and not £130.9m?

Because I think someone forgot which number to multiply. But yeah, my math of using 2.7% inflation (British inflation) makes the revenue to be flat. I think a keen investor should be scratching their head on that one because according to GW "Fine"ancial report, they experience .7% DEflation.

Guess the GW accountant had the right attitude then
But 2.7% more revenue at 2.7% inflation rate looks flat to me.
As I said some time ago: If GW needs to double its prices to keep revenue flat, they are indeed in dire straights.

This, anybody who tried to analyze this in any other way lacks some critical thinking skills. This is unsustainable, it's only a matter of time before it collapses like a neutron star. I, for one, can't wait! It'll be good for the hobby

To summarize:

This financial year had:
- a new 40k edition with rules and starter box
- a new Hobbit edition with rules and starter box (costing double the price than its predecessor at release, same with miniatures)
- 6 new Codices/Armybooks from January to May (each costing double the price than its predecessor at release)
- Miniature releases with big boxes at ever rising prices (Eldar Titan outside of this financial year though)

Still, the total revenue only managed to stay flat adjusted for inflation. What options have they left to keep revenue flat next year? Another 40k Edition? 2 Codices per month? Quadrupling prices?

Why does Tom Kirby have mixed feelings about this result? Because he still gets one million GBP out of this!

 Kanluwen wrote:

 spaceelf wrote:

They claim that they are closing stores because of rent, not because of their employees. If it is so hard to find good people as they say, then why not take the employees from the stores that are closing and staff new stores with them? When a GW store closes in the US, the staff have to reapply for jobs. They are not transferred. Most of course are not rehired.

Of course the staff are not transferred.

That costs money on both the employee and employer's end. How many people do you think are willing to move to work what amounts to a minimum wage job?

A one man store operator earns more than minimum wage and gets health insurance. I am not saying that it is a good deal for the employee, or that it is a good job.

When I say transferred, I mean assigned to another local store, not necessarily relocated.

The reality is that it is not about finding cheap places to put stores, nor about fining good employees. They are pulling out of certain towns and opening up in others. I believe the reason for this is that the market in the old towns has dried up.

 Kroothawk wrote:
- 6 new Codices/Armybooks from January to May (each costing double the price than its predecessor at release)

Old codexes were 30-33 weren't they? 30-33 * 2 =/ 50.

AlmightyWalrus said it right!

 Kroothawk wrote:
To summarize:

This financial year had:
- a new 40k edition with rules and starter box
- a new Hobbit edition with rules and starter box (costing double the price than its predecessor at release, same with miniatures)
- 6 new Codices/Armybooks from January to May (each costing double the price than its predecessor at release)
- Miniature releases with big boxes at ever rising prices (Eldar Titan outside of this financial year though)

Still, the total revenue only managed to stay flat adjusted for inflation. What options have they left to keep revenue flat next year? Another 40k Edition? 2 Codices per month? Quadrupling prices?

Why does Tom Kirby have mixed feelings about this result? Because he still gets one million GBP out of this!

I know what will save GW next year - a Brettonian army book. It's been that long, that I would probably but every new Brettonian release three times! There are many like me

Interesting that he spent the vast bulk of the space talking about attitude for employees, how skill doesn't matter, and how doing it any other way would somehow be bad for morale. What a terrible company to work for

But they're holding steady on making a profit each year, that can't be denied. Lost my business for the last 2 years now, but I'll still buy their rulebooks and use alternate models to play their games

Particularly so now that they've made sure in law that it's acceptable for other companies to make compatible parts / models, via their Chapterhouse case.

 pretre wrote:

 Kroothawk wrote:
- 6 new Codices/Armybooks from January to May (each costing double the price than its predecessor at release)

Old codexes were 30-33 weren't they? 30-33 * 2 =/ 50.

In Germany they were 18-20€ at release, now 39€.

 Kroothawk wrote:

 pretre wrote:

 Kroothawk wrote:
- 6 new Codices/Armybooks from January to May (each costing double the price than its predecessor at release)

Old codexes were 30-33 weren't they? 30-33 * 2 =/ 50.

In Germany they were 18-20€ at release, now 39€.

That's what you get for having the Euro.

 pretre wrote:

 Kroothawk wrote:

 pretre wrote:

 Kroothawk wrote:
- 6 new Codices/Armybooks from January to May (each costing double the price than its predecessor at release)

Old codexes were 30-33 weren't they? 30-33 * 2 =/ 50.

In Germany they were 18-20€ at release, now 39€.

That's what you get for having the Euro.

More like the Germanyandtheresto

 RiTides wrote:
Interesting that he spent the vast bulk of the space talking about attitude for employees, how skill doesn't matter, and how doing it any other way would somehow be bad for morale.

It's a lot easier to teach someone a skill than to teach someone an attitude.

 Kroothawk wrote:

Another thing: First half outsold second half of financial year. Seems the Hobbit bubble / Xmas sales / new a-Codex-a-month schedule didn't pay off?

Was the 6th edition rulebook released this Fiscal Year or last?

Also, there's a lot of Chaos players who got a new Codex.

 Sigvatr wrote:

How about other gameslike Pokémon or role-playing games? (Who can remember them, now?)

I...I...I am out of words.

Yeah, this is an odd jibe. I swear the Pokémon franchise alone will bring in more money than the entirety of GW.