GW half-year financials published - Reboot thread -

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**Silver_skates**

I've realised I made a slight error. The reboot of 40k was last year. A fall in revenue is totally expected as a result.

If I was advising an investor, I would tell them to buy stock in GW before the Warhammer reboot (this year allegedly). If Warhammer succeeds, sell half of stock and make a profit. If its a flop, buy more stock before the panic reaction of launching 40k next year. Of course, I'd have to look at the trends of more than just two periods to have a completely firm grasp on what's going on if money was at stake.

In other words, GW is doing as expected. The company is likely to go nowhere.

**jonolikespie**

Yeah GW aren't about to disappear or anything but the worrying thing (or silver lining, depending on your view

) is that GW's responses to all this seem to be more of the same stuff that got them here, only faster.

**Alpharius**

Silver_skates wrote:
I've realised I made a slight error. The reboot of 40k was last year. A fall in revenue is totally expected as a result.

If I was advising an investor, I would tell them to buy stock in GW before the Warhammer reboot (this year allegedly). If Warhammer succeeds, sell half of stock and make a profit. If its a flop, buy more stock before the panic reaction of launching 40k next year. Of course, I'd have to look at the trends of more than just two periods to have a completely firm grasp on what's going on if money was at stake.

In other words, GW is doing as expected. The company is likely to go nowhere.

I think if you were advising an investor you'd probably not even really have your clients looking at GW stock...

**Kroothawk**

Tom Kirby's response is to blame everyone that blindly followed his orders, like one-man shop staff and all foreign HQs. From now on all false decisions are made directly in Nottingham... like before actually.

**Palindrome**

Silver_skates wrote:

In other words, GW is doing as expected. The company is likely to go nowhere.

For the next couple of years you are almost certainly right. The issue is that GW's declining sales volume is not a new thing, it has been a trend for (8?) years. Revenues have stayed steady throughout this period but these have now taken a very noticable drop. If this continues, and I strongly suspect that it will given how poorly WHFB 8th is reputed to have performed and GW's seeming reluctance to reform itself, then GW will be in serious trouble.

As it is they are still healthy although they have been given a nasty shock. It is now up to them to get their house in order so that a series of extremely similar shocks doesn't end up killing them.

**RFHolloway**

Silver_skates wrote:
HairySticks wrote:
Do we have an accountants or investor types kicking around dakka that can give the laymen a run down of what the report is really saying?
Sure we can all read it, but most of us arent going to know the specifics of reading a financial report for a company.
Numbers are almost always misleading when written corporate types

As this is what I do for a living, I'll give it a bash. I will say, this is my theories based on figures as they exist. Theories are opinions and not facts which is what makes my job hard to do. Someone else might read the same figures and read something different. Plus, I'm not very good at my job

Revenue fell by £7m (ignore revnue adjusted for currency and interest as these can be manipulated by internal estimates that I do not have access to). Obviously not a good thing as revenue going down is revenue going down. Even worse, a relaunch for WH40k in that period should have seen an increase in revenue not a decrease. Also, revenue decreased accross all geographical regions showing that this is not an isolated economic situation.

Gross margin held steady at 70%. Basically, for every 30p of raw materials GW buys they take £1 worth of revenue. This really points to the fact that they could quite easily charge less for their goods. However, it debunks the theory that price hikes are purely revenue decisions. Price hikes are protecting GW's margins, they are merely passing on their own purchase price increases.

Operating expenses (the cost of the stores is the main cost to this I assume) holds steady at £37m. Kind of goes against what is being said that they have cut cost basis with one man stores. Or we will see a reduction in the second half of 2014 financial year.

Royalties increased rapidly suggesting that all these independant apps and novels (assuming Black library is outside main group) are making much higher sales and can be forecasted to increase as they gain traction in their respective fields.

Profit before tax has reduced by £3m. Lower revenue, lower profits and this leads to the lower Earnings per share.

Intangible assets have increased by £2m. I find this interesting because intangible assets are often ways of hiding costs on balance sheet as it is purely on the directors opinion that an intangible can be capitalised. Without detailed reports its impossible to know what has been capitalised or not. My assumption is the spead of producing codexes has led to an increase and an increase in intellectual property which has been capitalised to be written off over its "useful economic life". I would flag this as a red herring in my job. If not capitalised profits would reduce by £5m.

Debtors reduced by £2m showing a decline in sales to companies. Deterrant business practices would be the main reason for this.

Here is the big reason I would flag this company as a concern. Cash has reduced by £7m. A reduction in cash is the first sign a business is failing. You can sugar coat costs by moving things about but you cannot miss the fact that cash in the business is down. However, trade creditors are down by £7m. Perhaps they have paid a larger amount of creditors quicker than last year? It might explain downturn in cash but not excuse it.

Current is above 1. This is a companies ability to pay its current liabilities with is current assets. Anything above 1 is good. Also the acid test ratio (ability to satisfy current liabilites with cash) is 0.7. Anything above 0.5 is good. This is not a company that is about to disappear down a black-hole or be bought by anyone else. Sorry to those hoping for that.

The second six months will be interesting.

solid analysis

I will add, no dividend will usually produce a drop in share price, particularly if unexpected.

My analysis is as follows.

The relevant facts seem to be the following - sales declinging slightly, profits declining more.

The next question is why? for that you need to look at the segmental analysis. This starts on page 10 of http://investor.games-workshop.com/wp-content/uploads/2014/01/2013-14-Press-statement-final-released.pdf

What this shows is on the retail side sales fell from £67m to £60m but operating profits in the stores were static at £11m. the same profit from less revenue, exactly what you and I know, prices up, sales down, but it is overall neutral to GW.

The issue was actually in the factories or "product and supply" which fell by over £5m. Now the internal estimate of revenue for "product and supply" was down about £2m. That leaves a £3m additional expenses in the factories . It might have something to do with some production problem, it might have something to do with the closure of the US factories, but it doesn't appear to be massive loss in sales from people getting disaffected.

**dereksatkinson**

Alpharius wrote:
Silver_skates wrote:
I've realised I made a slight error. The reboot of 40k was last year. A fall in revenue is totally expected as a result.

If I was advising an investor, I would tell them to buy stock in GW before the Warhammer reboot (this year allegedly). If Warhammer succeeds, sell half of stock and make a profit. If its a flop, buy more stock before the panic reaction of launching 40k next year. Of course, I'd have to look at the trends of more than just two periods to have a completely firm grasp on what's going on if money was at stake.

In other words, GW is doing as expected. The company is likely to go nowhere.

I think if you were advising an investor you'd probably not even really have your clients looking at GW stock...

I really do think you guys are seeing what you want to see in these reports. Management can't control everything and pointing to revenue dropping 12% as a "failure of management" is complete nonsense. Previously, other board members tried to argue that UK retail has been doing great so this is a GW specific problem. The REAL reported numbers coming out of retailers has been absolutely terrible. Hence, why so many major retailers are closing stores at a pace we have not seen since the great depression. Who do you believe? The companies that are driven by the bottom line? Or the bureaucrats trying to get reelected?

I would most certainly put a stock with a 7% yield and 33% ROE in a portfolio. I will not be doing that because I don't like the current market environment though. I'm saying this objectively as a financial advisor. I'm a market technician, a RIA and have worked for some pretty major hedgefunds. Now I'm in the ETF world so I don't get to do as many hot shot calls. Well.. at least I don't get paid to.

When taken in context, they successfully turned around a failing company and over 5 years took the stock price from 120 - 820.. Even after the correction, they are still outperforming the major indexes. And corrections always happen. It's the market's way of clearing away the excess speculation. The stock market is overvalued on every metric. Even in the UK. Being a specialty retailer, they are much more sensitive to changes in consumer discretionary spending. If you look at their stock price, it leads the stock market. It tops and bottoms ahead of the stock market much like all retailers. http://finance.yahoo.com/echarts?s=GAW.L+Interactive#symbol=gaw.l;range=my;compare=^gspc;indicator=volume;charttype=candlestick;crosshair=on;ohlcvalues=0;logscale=on;source=undefined;

If you want to look at companies that are actually poorly managed.. look at JCP or BBY. Those are examples where management has fethed up. I still can't get over the fact you guys are complaining about a 7% yield.

**weeble1000**

I don't think people are complaining about a 7% yield. I think what people are saying is that GW's sales volume appears to be declining, and declining somewhat faster than it has been.

For a wargaming company, this is a problem. Maybe not a doom and gloom, melt down next quarter problem, but a problem that has been steadily increasing in spite of what the company has done to address it. In other words, the company is accelerating the problem, or at least not preventing its acceleration.

Why is declining unit sales a problem? Wargaming is by and large a social activity. Anecdotally, we've heard about a lot of folks seeing a decline in 40K and WHFB being played in their local clubs or even being dropped altogether. Less people buying does not necessarily equal less people playing, but that seems to be the case. Playing and buying go hand in hand.

If you are playing a game a lot, you are probably buying related products. If you aren't, you're probably buying fewer and spending your money on what you are playing.

The less people play 40K, the less value the products have. Already the products are a comparatively poor value proposition compared to competitors if you discount how many people are playing the game. Volume of players and market saturation have been GW's principle strengths for more than a decade.

They are weakening, and beginning to weaken precipitously. That's the problem. It doesn't matter if the company is profitable NOW. It is. It sure as Hell is. But its position of strength in the market is slipping more every day. People aren't playing 40K and WHFB like they used to. If GW doesn't turn that around, its market share is going to spiral downwards. And as a company with as many costs as GW, there is going to be a point at which declining market share will not allow GW to operate in the way it has been operating.

GW might turn this decline around, but I doubt it. There's plenty of room to do so, but Kirby and Co. do not appear to know how to do it.

GW isn't selling mung beans and cans of cola. GW is selling entertainment. Its games just aren't as fun anymore, dollar for dollar.

**McNs**

weeble1000 wrote:

They are weakening, and beginning to weaken precipitously. That's the problem. It doesn't matter if the company is profitable NOW. It is. It sure as Hell is. But its position of strength in the market is slipping more every day. People aren't playing 40K and WHFB like they used to. If GW doesn't turn that around, its market share is going to spiral downwards. And as a company with as many costs as GW, there is going to be a point at which declining market share will not allow GW to operate in the way it has been operating.

I look at GW being a bit like Microsoft: they're market leaders in their industries that everyone is concerned about the long-term viability of due to what are perceived as poor business decisions (one could compare the Zune to WFB 8th). Both Microsoft and GW are still quite profitable. So the question is: why change course?

I think this topic has been done to death, so I'll shut up now. It'll be interesting to see what happens in 6 months.

**frozenwastes**

There is also no 7% yield. There is a 0% yield as no dividend has been declared yet and likely won't be until revenue can be stabilized. Internal returns on capital and returns one equity can be good indicators, but no one other than the board of directors actually has access to that in practical terms.

As for the old thread, there is one topic I'd like to bring back. Third part bitz sellers and the growth of alternative miniatures aimed directly at GW's game worlds.

I used to think that GW's declining sales volume meant that people making bitz for GW's games were targeting a declining customer base. Now I'm thinking they are actually taking advantage of a genuine market that is actually growing-- people dissatisfied with GW's offerings alone, but not so dissatisfied that they are going with a competitors game or quitting the hobby entirely.

Is it possible the reason GW would not let up on the CHS issue even when told flat-out by a judge that putting CHS out of business wasn't going to happen in the court case is that GW knows that this segment of the market is the fastest growing? That Forgeworld has largely had it locked down, but now it's being totally blown wide open?

The 3rd party accessory sellers might be super small individually, but there's an awful lot of them and they seem to be transitioning more and more into actual miniature production rather than just making guns and cybernetic arms and razorback turrets.

Is this segment of the market growing? Thoughts?

**wuestenfux**

I don't think people are complaining about a 7% yield. I think what people are saying is that GW's sales volume appears to be declining, and declining somewhat faster than it has been.

Despite the fact that GW has a stable product line and SM, the best selling army, were coming out in the last half a year.

**Azreal13**

frozenwastes wrote:
There is also no 7% yield. There is a 0% yield as no dividend has been declared yet and likely won't be until revenue can be stabilized. Internal returns on capital and returns one equity can be good indicators, but no one other than the board of directors actually has access to that in practical terms.

As for the old thread, there is one topic I'd like to bring back. Third part bitz sellers and the growth of alternative miniatures aimed directly at GW's game worlds.

I used to think that GW's declining sales volume meant that people making bitz for GW's games were targeting a declining customer base. Now I'm thinking they are actually taking advantage of a genuine market that is actually growing-- people dissatisfied with GW's offerings alone, but not so dissatisfied that they are going with a competitors game or quitting the hobby entirely.

Is it possible the reason GW would not let up on the CHS issue even when told flat-out by a judge that putting CHS out of business wasn't going to happen in the court case is that GW knows that this segment of the market is the fastest growing? That Forgeworld has largely had it locked down, but now it's being totally blown wide open?

The 3rd party accessory sellers might be super small individually, but there's an awful lot of them and they seem to be transitioning more and more into actual miniature production rather than just making guns and cybernetic arms and razorback turrets.

Is this segment of the market growing? Thoughts?

It's certainly a decent supposition based on the information we have to hand.

One can certainly see a number of front runners starting to transition from minnow to established player type positions, and some are producing some really quite sophisticated models of very respectable quality.

I guess the watershed will be when some of these emerging names (the likes of Anvil Industries, Puppets War, CHS, Kromlech et al) gets large enough, or Kickstarts, to transition into plastic kits like Dream Forge. If there are a number of companies producing alternate models for a number of factions, likely priced very competitively if DF and the Perrys are anything to judge by,, then that simultaneously undermines one of GW's key competitive advantages (a wider, more diverse range of modular plastic kits than anyone else right now) and will dramatically highlight how far adrift their pricing is from where it should/could be.

**Kilkrazy**

frozenwastes wrote:
There is also no 7% yield. There is a 0% yield as no dividend has been declared yet and likely won't be until revenue can be stabilized. Internal returns on capital and returns one equity can be good indicators, but no one other than the board of directors actually has access to that in practical terms.

As for the old thread, there is one topic I'd like to bring back. Third part bitz sellers and the growth of alternative miniatures aimed directly at GW's game worlds.

I used to think that GW's declining sales volume meant that people making bitz for GW's games were targeting a declining customer base. Now I'm thinking they are actually taking advantage of a genuine market that is actually growing-- people dissatisfied with GW's offerings alone, but not so dissatisfied that they are going with a competitors game or quitting the hobby entirely.

Is it possible the reason GW would not let up on the CHS issue even when told flat-out by a judge that putting CHS out of business wasn't going to happen in the court case is that GW knows that this segment of the market is the fastest growing? That Forgeworld has largely had it locked down, but now it's being totally blown wide open?

The 3rd party accessory sellers might be super small individually, but there's an awful lot of them and they seem to be transitioning more and more into actual miniature production rather than just making guns and cybernetic arms and razorback turrets.

Is this segment of the market growing? Thoughts?

The bits manufacturers sell to veterans of 40K (maybe WHFB too, IDK).

Presumably vets often buy secondhand stuff and retrofit new bits, or use bits on scratchbuilds, that kind of thing, so the bits sellers are not so dependent on GW's full price sales. In the long run, if WH/40K stuff went out of production, that market would decline and probably they would retool to make bits for other games.

**weeble1000**

frozenwastes wrote:
There is also no 7% yield. There is a 0% yield as no dividend has been declared yet and likely won't be until revenue can be stabilized. Internal returns on capital and returns one equity can be good indicators, but no one other than the board of directors actually has access to that in practical terms.

As for the old thread, there is one topic I'd like to bring back. Third part bitz sellers and the growth of alternative miniatures aimed directly at GW's game worlds.

I used to think that GW's declining sales volume meant that people making bitz for GW's games were targeting a declining customer base. Now I'm thinking they are actually taking advantage of a genuine market that is actually growing-- people dissatisfied with GW's offerings alone, but not so dissatisfied that they are going with a competitors game or quitting the hobby entirely.

Is it possible the reason GW would not let up on the CHS issue even when told flat-out by a judge that putting CHS out of business wasn't going to happen in the court case is that GW knows that this segment of the market is the fastest growing? That Forgeworld has largely had it locked down, but now it's being totally blown wide open?

The 3rd party accessory sellers might be super small individually, but there's an awful lot of them and they seem to be transitioning more and more into actual miniature production rather than just making guns and cybernetic arms and razorback turrets.

Is this segment of the market growing? Thoughts?

Except GW has left alone the parties making whole miniatures ranges. They kicked a hornet's nest with Chapterhouse and blew their legal wad on a badly chosen target. Not that they had much of a leg to stand on considering the allegations.

GW may be afraid of those producers, but GW could beat them on both quality and price. That's what's insane. GW has created a market for those products by putting out unsatisfactory art at an unsatisfactory level of quality at a price that is stiff enough to not cause sticker shock when customers look at small run boutique miniatures.

But I don't think GW is bleeding customers to the likes of PuppetsWar and Anvil Industries. GW may be bleeding some sales to those companies...maybe. The industry is simply different now. Customers have a lot more choice when it comes to getting exactly what they want and what they want isn't always what GW has to offer. That's the market at work. GW needs to put up or shut up instead of worrying about what is "fair."

What is fair is artists creating something new that the market accepts as new and values as new being allowed to benefit from their originality. What is fair is GW being under pressure to innovate or lose sales.

I just never understood why someone could look at a work of art that consumers in a free market literally value more highly than Games Workshop's art and claim that those works of art are not unique and should, again, literally fall within GW's ownership and control.

Ultimately (toys or not, game or not), this industry is about buying art. Some companies sell art and entertainment. But customers can very easily consume your entertainment and not consume your art. GW doesn't like that. GW doesn't like someone playing its game and not buying its art. GW feels that it is unfair for a company to be able to only sell art because GW is putting effort into selling entertainment. Well tough cookies. Improve your art. Sell a better product at a better price.

Just because a company benefits from a market that you create does not mean they aren't allowed to be in business. If that were the case, we'd all be in big trouble.

**PhantomViper**

Silver_skates wrote:
I've realised I made a slight error. The reboot of 40k was last year. A fall in revenue is totally expected as a result.

A fall in revenue is certainly not expected in a period where they have relaunched their biggest selling line: Space Marines.

**frozenwastes**

azreal13 wrote:

One can certainly see a number of front runners starting to transition from minnow to established player type positions, and some are producing some really quite sophisticated models of very respectable quality.

I guess the watershed will be when some of these emerging names (the likes of Anvil Industries, Puppets War, CHS, Kromlech et al) gets large enough, or Kickstarts, to transition into plastic kits like Dream Forge. If there are a number of companies producing alternate models for a number of factions, likely priced very competitively if DF and the Perrys are anything to judge by,, then that simultaneously undermines one of GW's key competitive advantages (a wider, more diverse range of modular plastic kits than anyone else right now) and will dramatically highlight how far adrift their pricing is from where it should/could be.

I think if any of these companies start to move beyond the garage kit level, it could be a game changer. GW has already failed to shut one of them down in a protracted court case. For years, they've relied on smaller companies caving under legal threat, but now that people have seen a smaller company survive GW's full legal resources, who knows what people are thinking.

While we here talk about how GW gaming communities are drying up in many locations, I wonder if the die hards in those communities have really, truly quit, or if they're still happily playing with a buddy or two and continuing with lots of hobby projects at home. While there is pretty much no regular 40k gaming where I am (it's all Flames of War and WM/H) there are still a couple big 40k events each year that brings all the die hards out of the woodwork. And it's a sea of Forgeworld and 3rd party manufacturers like Scibor, CHS and Kromlech that gets brought to these events.

I think in the full annual report, we'll see that Forgeworld is continuing to perform very, very strongly and GW's core business will continue a slow decline. Hopefully they'll take a moment to highlight divisions that are doing well like they did last year.

**Azreal13**

Well, all anecdotal of course, but thanks to the only local LGS being a GW which has cut back notably on open gaming, and our events man choosing to start the New Year with a slow grow league, our club membership has broken records, both for overall attendance and number of 40K games in the last two weeks, that's even allowing for the fact that two years ago when it started, the club was exclusively GW (so de facto 40K exclusive) and now has healthy Warmachine, Infinity, X Wing and Historical sub-sets.

There's life in this particular dog yet, but the next few months could be the most important in its history.

**frozenwastes**

weeble1000 wrote:
Except GW has left alone the parties making whole miniatures ranges. They kicked a hornet's nest with Chapterhouse and blew their legal wad on a badly chosen target. Not that they had much of a leg to stand on considering the allegations.

GW may be afraid of those producers, but GW could beat them on both quality and price. That's what's insane. GW has created a market for those products by putting out unsatisfactory art at an unsatisfactory level of quality at a price that is stiff enough to not cause sticker shock when customers look at small run boutique miniatures.

It's actually really strange isn't it, when people can hand cast resin in small batches and offer it at a lower price than GW's mass produced plastics? GW should be experiencing some sort of competitive advantage for the whole economies of scale thing, but there's just nothing there.

But I don't think GW is bleeding customers to the likes of PuppetsWar and Anvil Industries. GW may be bleeding some sales to those companies...maybe.

When discovery occured, CHS's sales didn't turn out to be that large year over year, did they?

**Boggy Man**

Alpharius wrote:
Silver_skates wrote:
I've realised I made a slight error. The reboot of 40k was last year. A fall in revenue is totally expected as a result.

If I was advising an investor, I would tell them to buy stock in GW before the Warhammer reboot (this year allegedly). If Warhammer succeeds, sell half of stock and make a profit. If its a flop, buy more stock before the panic reaction of launching 40k next year. Of course, I'd have to look at the trends of more than just two periods to have a completely firm grasp on what's going on if money was at stake.

In other words, GW is doing as expected. The company is likely to go nowhere.

I think if you were advising an investor you'd probably not even really have your clients looking at GW stock...

I'm certainly not a broker, but I have family that follows the market obsessively. Stocks are still unstable and in this economy. Tulipomania seems to be a reoccurring theme. (The gold rally about 2 years ago, bitcoins now.)
There's no way I would advise putting anything into GW. If this were a normal market, and they actually had an open corporate culture that embraced change, ... and if my aunt had dakka she'd be a Warboss.

'Too big to fail, We are owed your loyalty' ; this is not corporate climate of a stock ready to rally. Anyone who thinks a huge outmoded company can't disappear has been asleep for the past 10 years.

**Jaiste**

May have to thank Major Tom for this, somehow the re-booting of this thread has actually generated some *gasp* financial analysis as opposed to the 38 pages of pricing complaints, calls for the imminent doom of GW and revelry in that fact.

All too often as a community we tend to embrace emotional reasoning when discussing GW's business practices, and all too often the analysis of GW's condition and future is made without any firm grounding in financial data or even with regards to simple business sensibilities. While probably made with the best intentions some of this "Analysis" that doesn't actually include anything of the sort can be dangerous to sentiments within the community. No one yells fire in a movie theater when they see an exposed electrical wire. They note the existence of the exposed wire and the risks it creates.

The bottom line is there is no current "going concern" for GW, the reductions in revenues and the potential softening of the GW market are certainly though concerning. Whether these drops can be attributed to the console releases only time will tell, and the year over year numbers should be more indicative of this.

GW due to it's market niche is a difficult company to valuate, and befitting the fact that it is a relatively illiquid small cap stock has been subject to some wild stock price fluctuations over the years (although obviously some are attributable to macro environment and performance). I suspect that GAW was overvalued at 800, and some market correction was necessary poor results or not.

**weeble1000**

frozenwastes wrote:

When discovery occured, CHS's sales didn't turn out to be that large year over year, did they?

Some of their most popular products sold something in the neighborhood of 1,000 to 2,000 units, if I recall correctly. Many more far fewer. This industry is very small.

**Jaiste**

weeble1000 wrote:
frozenwastes wrote:

When discovery occured, CHS's sales didn't turn out to be that large year over year, did they?

Some of their most popular products sold something in the neighborhood of 1,000 to 2,000 units, if I recall correctly. Many more far fewer. This industry is very small.

I won't ever fully understand GWs decision to litigate there. Certainly they have to make a stand on IP somewhere, though I think they probably could've waited for a more compelling case in which to do so in.

In all likelihood they bluffed on threatening legal action and CHS called that bluff.

**dereksatkinson**

As I said before.. GW is a specialty retailer and I fully expect retail to do poorly as people finally wake up to the fact we are still in a full blown depression. Their sales and stock price will suffer but not for the reasons you guys are giving. The consumer is completely tapped out.

Store closures all across retail and youth unemployment numbers SHOULD tell you that.. I'm not going to try to sit here and convince everyone about that. Oh well.. back to work.

**Hivefleet Oblivion**

It's worth pointing out that the shares have hardly tanked, they've returned to the level of 18 months ago.

I hope this is a wake-up call for GW. They obviously need to address recruitment - I vote they introduce Space Hulk-style sets, which are cool, playable for young kids, and will ease them into the universe. But the most serious aspect is the lack of community, something they've allowed to slide drastically over the last couple of years. We play a lot in GW stores, but increasingly in our good local FLGS. The local GW used to organise leagues and tournaments with dozens of people - now this has collapsed, and we've turned up for campaigns, then been hassled by staff if the game goes over an hour.

Kirby boasts about the company attitude - their job ads, in the shops, are bizarre, very intimidating, and suggest a very fixed company culture. The biggest challenge is whether they can change their attitude and culture. I hope they do, they're a successful British manufacturing company, who produce mostly on-shore, and we don't have too many of them.

**knighthaunter**

MajorTom11 wrote:

Accidents happen. Give me your address and I'll send you my pinky if it makes you feel any less dramatic

Send it to my house, I have been wanting to start an imperial cult, all i need is a holy relic from Saint Tom and a pinky will do nicely :-)

on topic... I think the tale will really be told when we see the years numbers. I think the numbers do not bode well but the stock dip was mainly due to this being a regular dividend stock, from my (limited) experience people overlook a lot of things on stocks that pay regular dividends, until they stop. so it'll be very interesting to see how things are going in the next 6 mos.

**weeble1000**

Jaiste wrote:
weeble1000 wrote:
frozenwastes wrote:

When discovery occured, CHS's sales didn't turn out to be that large year over year, did they?

Some of their most popular products sold something in the neighborhood of 1,000 to 2,000 units, if I recall correctly. Many more far fewer. This industry is very small.

I won't ever fully understand GWs decision to litigate there. Certainly they have to make a stand on IP somewhere, though I think they probably could've waited for a more compelling case in which to do so in.

In all likelihood they bluffed on threatening legal action and CHS called that bluff.

Of course they did. No reasonable person would have expected that Winston and Strawn would spend millions of dollars to defend Chapterhouse pro-bono.

On the same token, no reasonable person would have tried to destroy a company causing no measurable harm to your business purely because you could afford to sue them. Kirby even said in the last annual report that GW goes after "intransigent small infringers" regardless of the fact that they do not affect GW's profits. It's the principle of the thing, you know. Except that principle got crapped on by the Court's dismissal of claims and the jury's findings in favor of Chapterhouse Studios. And it could very well get flushed down the toilet on appeal.

In any case, Kickstarter is a much more realistic threat to GW than companies selling boutique accessories intended to modify the appearance and functionality of GW's products, which in my view includes whole models. Who has an entire not-Space Marine army of Anvil Industry models? Probably very, very few individuals. Doubtless those models are supplanting the place of similar GW products in the collections of some wargamers and doubtless they are selling well, or else Anvil wouldn't keep making more of them

.

But even so, their use is probably supplemental to that of GW's products, thus adding value to GW's products even if they take some value away in the form of lost sales. But as to those lost sales, to the extent there are any, were they lost purely on the basis of a price undercut, or on the basis of aesthetic value/increased functionality? If the prices of the competing products is higher, and it is, a consumer's decision to purchase one over the other has little enough to do with price and all to do with having been offered a previously non-existent product that met an unfulfilled demand.

GW should be more worried about demand its products are not meeting, rather than with trying to prevent others from exercising their legitimate rights to meet it. That's what a responsible business does. Healthy competition is ultimately good for the consumer. We get better products and better prices. We are seeing that happen today. The industry is positively booming with new products and new ideas. If GW can't keep up that's its own problem. It is perfectly clear that someone will provide us with the type of products that we want.

**Jaiste**

weeble1000 wrote:
Jaiste wrote:
weeble1000 wrote:
frozenwastes wrote:

When discovery occured, CHS's sales didn't turn out to be that large year over year, did they?

Some of their most popular products sold something in the neighborhood of 1,000 to 2,000 units, if I recall correctly. Many more far fewer. This industry is very small.

I won't ever fully understand GWs decision to litigate there. Certainly they have to make a stand on IP somewhere, though I think they probably could've waited for a more compelling case in which to do so in.

In all likelihood they bluffed on threatening legal action and CHS called that bluff.

Of course they did. No reasonable person would have expected that Winston and Strawn would spend millions of dollars to defend Chapterhouse pro-bono.

On the same token, no reasonable person would have tried to destroy a company causing no measurable harm to your business purely because you could afford to sue them. Kirby even said in the last annual report that GW goes after "intransigent small infringers" regardless of the fact that they do not affect GW's profits. It's the principle of the thing, you know. Except that principle got crapped on by the Court's dismissal of claims and the jury's findings in favor of Chapterhouse Studios. And it could very well get flushed down the toilet on appeal.

Kirby's bravado there just exemplifies the business precedent that GW was looking to set, if you infringe, we will squish you. Unfortunately for GW, there's a whole 'nother aspect to precedent that perhaps they didn't consider- the legal precedent that is set after a fairly unique IP case and opens the door to even more possible "infringement". Which is what we saw. Cannot imagine they feel too great about their decision in hindsight. I agree also on their focus needing to be on meeting those markets- that 250k investment could have gone to much better places.

**weeble1000**

dereksatkinson wrote:
The consumer is completely tapped out.

How much money did we spend on Kickstarter alone last year? 55 Million Dollars Yea, we're tapped out alright. Tapped out from buying an unprecedented amount of gaming products. Personally, I flushed more money into my hobby last year than I did in 2012, easily.

Kickstarter alone raised 55 million dollars just for tabletop games. Corvus Beli grew by what, 75% 2012-2013? ICv2 says that from what it can estimate the market is growing by more than 16% per year in the US. You can grouse about this number or that number all you want, but it is pretty clear that table top wargaming is booming regardless of what the economy is like.

And who didn't have a Kickstarter in 2013? Yea, that's right...Games Workshop, so we know that GW saw none of that 55 million dollars. None. Some of it went to GW's direct competitors, Hell, a lot of it did.

It is all very well to say that the economy sucks all over the world and big box retailers are struggling, but the proof is in the pudding. People are spending plenty money on tabletop games. But they are clearly not buying as many GW products. That's a problem for GW in an industry this small when its major strength is market share.

**insaniak**

dereksatkinson wrote:
Management can't control everything and pointing to revenue dropping 12% as a "failure of management" is complete nonsense.

That would sort-of depend on the reason for that drop in revenue, surely?

If it's due to a down-turning market, and GW are just making the best they can of a bad situation, then no, that's not necessarily management's fault.

If it's due to regionalisation, supply issues, cutting independants off from new releases and large chunks of the range, 1-week preview windows, cutting off internet sales to drive people to their own webstore, price rises, resentment from dodgy litigation, poor PR, poor product support, lack-lustre releases and/or switching to one-man stores ... that would certainly seem to be the fault of management.

We keep hearing that the miniatures industry outside of GW is booming. The apparent rapid growth of a whole bunch of little games producers seems to bear that out. Which does seem suggestive, when trying to make a stab at which of those options would be more likely...

**weeble1000**

Jaiste wrote:

Kirby's bravado there just exemplifies the business precedent that GW was looking to set, if you infringe, we will squish you. Unfortunately for GW, there's a whole 'nother aspect to precedent that perhaps they didn't consider- the legal precedent that is set after a fairly unique IP case and opens the door to even more possible "infringement". Which is what we saw. Cannot imagine they feel too great about their decision in hindsight.

GW lives with blinders on. Maybe they'll start to get nervous when the appellate shoe drops...maybe. Right now, there's only some murky, lower court precedent on the books. If the 7th Circuit Court of Appeals comes down with a landmark decision on this (which could certainly happen), that's something people can hang their hat on, and I think you'll really see GW's grip on the market loosening.

I would be tickled pink if a few years from now the copyright and trademark filings were ringing with citations to the Games Workshop decision. That'll help their brand for sure.