Do you really think GW is "going under"?

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**Rainbow Dash**

You know what I think GW should try that most businesses do, sales!
People love sales, I may not need a box of tyranid warriors but if the price is right, hey they may come in handy!

**TheCustomLime**

Rainbow Dash wrote:
You know what I think GW should try that most businesses do, sales!
People love sales, I may not need a box of tyranid warriors but if the price is right, hey they may come in handy!

I am not a business expert but I believe GW is in with companies like Tiffany in that they don't do sales so that they don't devalue their products. They believe they are a high end premium models company that is above that.

**Hivefleet Oblivion**

Rainbow Dash wrote:
You know what I think GW should try that most businesses do, sales!
People love sales, I may not need a box of tyranid warriors but if the price is right, hey they may come in handy!

Downside: people won't buy standard models, as they'll wait for them to be in a sale.

Lots of companies who hold sales tend to do so with seasonal gear.

(OK they could have a sale of Genestealers, who are so last season, dahling but you know what I mean...)

**PhantomViper**

clively wrote:
insaniak wrote:
stopcallingmechief wrote:
Not trying to crap all over australia but when your minimum wage is $16 and its $10 in canada and what, $7 something in america things will and should cost more.

Minimum wages are irrelevant to whether or not people should be charged a fair price. But we don't need to derail another thread with the same old arguments about equal pricing in a global market.

If you believe that minimum wage doesn't have a large impact on pricing then you don't know much about how things work. Prices are based upon people's ability and willingness to pay. Forget anything you might have been told about production costs or anything like that. Those just represent a starting point to determine if a product is viable. The MSRP for a product is based upon what the target group is able and willing to pay and the profit the seller is willing to accept. That is exactly what defines "fair". If you personally aren't willing to pay the price, then you don't need to buy it.

Every single time minimum wage increases, the cost of basics such as milk, bread, clothing, housing, etc will go up. That's not because it suddenly costs that much more to produce - the human labor component in most of those items is neglible - it's because the people are now able and willing to pay more. It usually takes about 3 months after a mandated min wage increase before things "balance" back to how they were before.

It's really not that complicated and makes complete sense if you think about it.

If you really want price parity (same product, same price regardless of location) - then wages have to be normalized across the globe. There are a LOT of things that would have to change to make this happen. Not the least of which is governments giving up on imposing tariffs and various trade restrictions based on origination of the product. Then, you'd also have to have similar education levels so that the distribution of skilled workers was such that location no longer mattered. Good luck with that as the only real way to make it happen would be to have a single world government.

Germany has twice the value of minimum wage that we have here in Portugal. They pay the exact same for GW products as we do. Your premise is therefore false, but thanks for playing in the 101st edition of the "minimum wage affects prices on a global market" game.

**Barfolomew**

clively wrote:
Do I think GW is "going under"? No. At least one poster compared them to Lehman brothers and Enron which is something you simply can't do. Heck, you can't even compare those two companies together as the machinations that brought them down were radically different..

I would tend to agree with this as I don't think GW is big enough to play games with sales to show they have more revenue than they actually do. There are also laws in place to prevent cooking the books the way Enron did to show more revenue than they actually had.

The closest parallel to GW is TSR (DnD). GW is mirroring the TSR path of ignoring the player base, thinking they have more influence than they actually do and flooding the market with product to boost sales. GW does however appear to be taking the correct path to prevent over production, which is what caused TSR to fold suddenly, but could lead to a loss of players because product isn't available.

I guess the most likely scenario is that GW's next financial report is rather poor and doesn't meet expectations and/or shows a downward trend. This causes the stock to tank, which may lead to one of three outcomes:

1) Current shareholders hold on to stock and force the board to vote in a new chairman
2) Kirby picks up more stock or current stock holders decided to keep him as chairman
3) Stock dips low enough that someone outside buys a controlling share and the company is sold or puts in their chairman

I think the chances of GW IP changing hands in the next year is fairly low. However, I do think the chances of the stock price tanking is fairly high, which means a new chairman and CEO should be in order. The primary issue with that is that I don't know how much GWs board, other than Kirby, actually care about the company's long term future. This means they may just slowly divest from the company and try to get out before it shrivels and dies.

The wildcard is what do other companies think GW's IP is worth?

**Wayniac**

TheCustomLime wrote:
Rainbow Dash wrote:
You know what I think GW should try that most businesses do, sales!
People love sales, I may not need a box of tyranid warriors but if the price is right, hey they may come in handy!

I am not a business expert but I believe GW is in with companies like Tiffany in that they don't do sales so that they don't devalue their products. They believe they are a high end premium models company that is above that.

Can't remember the quote but I read that this is what they actually think. That's why the "1-Click Collections" don't offer any discount whatsoever. They really think that their products are luxury level and that people will happily pay full price for the "privilege" of luxury figures (kind of funny as IIRC their plastic is the really cheap variety; it's like McDonalds having a $15 hamburger that's Big Mac with a fancy bun and saying it's a gourmet meal). Which is a bit funny because they technically DO offer sales, albeit in the form of boxed sets (e.g. Dark Vengeance, Stormclaw, Space Marine Strikeforce).

I also read somewhere (might have been here, don't 100% remember) that they recalled and destroyed unsold copies of Dreadfleet rather than put them on sale, to avoid giving the impression that one just has to wait a few months and the price will drop. Now from everything I've read Dreadfleet was abysmal, but still only a complete madman would eat the cost rather than sell for less and recoup SOME of that investment. It's like having a shop and selling things for double everyone else, and when nobody buys it turning around and burning the place down rather than having a sale!

**Rainbow Dash**

Well obviously they'd have to be very calculated about it and only certain things would be on sale-but I think even if people wait for a sale, I'm sure they'll probably spend more then they would have in the beginning!
People are funny like that. GW could make a lot more money then they do by...you know understanding how people shop.

Back in the day stores had auctions of all its damaged and random junk.
But they can't have all that money for things they'd just have thrown out so they had to get rid of that.
(Seriously people were paying for their garbage!! You stopped selling your garbage!)
That's the biggest wtf to me, I want them to thrive and be a great business, but they just seem to make one terrible decision after another. If the models were affordable, I'd be much more kind to the rules, on that coin, if the rules were better I'd be much kinder about the prices (because my dolls are on average more expensive, it's more the rules issue then the money, the money don't help, I don't need two really expensive, niche hobbies taking my money-only got room for one these days!)

**Hivefleet Oblivion**

Barfolomew wrote:

I think the chances of GW IP changing hands in the next year is fairly low. However, I do think the chances of the stock price tanking is fairly high, which means a new chairman and CEO should be in order. The primary issue with that is that I don't know how much GWs board, other than Kirby, actually care about the company's long term future. This means they may just slowly divest from the company and try to get out before it shrivels and dies.

The wildcard is what do other companies think GW's IP is worth?

This is the most interesting prospect. I've been there with a not dissimilar mass-market Plc, where the CEO got booted out by big investors... but you usually have to commit one really public error to get the boot like that. In my case it was the CEO losing around 30% of the company's market value with a disastrous deal.

Kirby's conservatism (save money, increase prices) would tend to mitigate against that, so while we can hope, I'm sceptical.

**Barfolomew**

TheCustomLime wrote:
[I am not a business expert but I believe GW is in with companies like Tiffany in that they don't do sales so that they don't devalue their products. They believe they are a high end premium models company that is above that.

Shame GW's gak doesn't hold it's value like Tiffany. I have a $1000 worth of WHFB I'll be lucky to get $200 out of.

**Rainbow Dash**

Barfolomew wrote:
TheCustomLime wrote:
[I am not a business expert but I believe GW is in with companies like Tiffany in that they don't do sales so that they don't devalue their products. They believe they are a high end premium models company that is above that.
Shame GW's gak doesn't hold it's value like Tiffany. I have a $1000 worth of WHFB I'll be lucky to get $200 out of.

but they think it does

**lord_blackfang**

Barfolomew wrote:
Shame GW's gak doesn't hold it's value like Tiffany. I have a $1000 worth of WHFB I'll be lucky to get $200 out of.

Then you don't have $1000 worth of WHFB, you just have $200 worth of WHFB that you paid $1000 for

Which makes you better off than a lot of us, honestly. I could have bought a very large car by now with all the money I spent on GW.

**TheCustomLime**

Games Workshop thinks too highly of itself in general. They believe that their products are the best, that all their customers want to do is buy their stuff and that they are above the rest of the TTG market. Their arrogance will be their downfall.

**Barfolomew**

Hivefleet Oblivion wrote:
This is the most interesting prospect. I've been there with a not dissimilar mass-market Plc, where the CEO got booted out by big investors... but you usually have to commit one really public error to get the boot like that. In my case it was the CEO losing around 30% of the company's market value with a disastrous deal.

Kirby's conservatism (save money, increase prices) would tend to mitigate against that, so while we can hope, I'm sceptical.

I think it depends on how much time the other board members spend or get presented with GW's market share information. Market share is a big deal as GW probably had 60%+ of the miniature gaming market share at one point and is probably down to sub 40% now, with a downward trend. Loosing 20%+ market share is a big deal.

I suspect that the board is presented with top line, bottom line and margin numbers and nothing else. The board is probably willfully ignorant of how the product is perceived and used in the market.

**Wayniac**

Isn't Kirby also the majority shareholder though? So could the other investors just kick him out like that?

**Barfolomew**

WayneTheGame wrote:
Isn't Kirby also the majority shareholder though? So could the other investors just kick him out like that?

I think he owns the most shares, but he only owns like 14% of the company, well below the 51% needed to be voted out proof.

**Hivefleet Oblivion**

WayneTheGame wrote:
Isn't Kirby also the majority shareholder though? So could the other investors just kick him out like that?

It would be the Board who sacks him; it can vary depending on, I think, the Memorandum of Association, which varies from company to company.

If big investors are unhappy, they\d usually speak to a particular member of the board, and try and get the ball rolling. The fact he has a substantial shareholding doesn't protect him against a majority of the board. But getting a majority could be tough... I think there's only five or them, and he's the chair, presumably with a casting vote, so you'd need four out of five board members to take up pitchforks against him.

**Azreal13**

Several members of the board have a long working relationship with Kirby, and in many cases probably (purely speculative on my part) are accustomed to him being in charge.

Coupled with the fact that Kirby is indeed the largest non-institutional investor, and something like third largest overall, it would take a massive ground shift to dislodge him if he doesn't want to go.

**Hivefleet Oblivion**

azreal13 wrote:
Several members of the board have a long working relationship with Kirby, and in many cases probably (purely speculative on my part) are accustomed to him being in charge.

Coupled with the fact that Kirby is indeed the largest non-institutional investor, and something like third largest overall, it would take a massive ground shift to dislodge him if he doesn't want to go.

Indeed. But there are issues of corporate governance; it's their responsibility to ensure the company is well-run, so the finance experts on the board they have, who've worked for banks etc, would have a duty to do something if they think he's running the company into the ground. That's why I don't think simply losing market share, hiking prices, and having no social media policy, is likely to get him the boot.
It would have to be a high-profile mistake that's directly attributable to him.

He's been quite good at drawing the sting of criticisms, though, if memory serves he acknowledged the one-man stores were a mess.

**Talizvar**

When dealing with those accustomed to power, they sometimes find it amusing when others think they have a say in what they do.

Kirby will leave when it suits him, no other time.

When it is not possible for him to receive dividends anymore he may move on, it is his primary reason to be where he is: to ensure he can pay himself, others luckily benefit as well.

**Kilkrazy**

TheCustomLime wrote:
Rainbow Dash wrote:
You know what I think GW should try that most businesses do, sales!
People love sales, I may not need a box of tyranid warriors but if the price is right, hey they may come in handy!

I am not a business expert but I believe GW is in with companies like Tiffany in that they don't do sales so that they don't devalue their products. They believe they are a high end premium models company that is above that.

The difference between farmers with a colossal heap of gak and GW is that farmers with a colossal heap of gak do not try to pretend it is not a colossal heap of gak.

YMMV.

**Happyjew**

Kilkrazy wrote:
The difference between farmers with a colossal heap of gak and GW is that farmers with a colossal heap of gak do not try to pretend it is not a colossal heap of gak.

YMMV.

Huh. And here I thought the difference was that the farmer's colossal heap of gak is actually useful for something.

**Rainbow Dash**

The excuse I got was "well apple doesn't do sales" to which I responded with "well GW is no apple"
that and, aren't you able to buy a significant number of their older products, where as with GW, you can't buy anything old?
They really do dilute themselves into thinking they are the best, even when the companies that they compare themselves to, generally have better track records, imo.

**Azreal13**

Hivefleet Oblivion wrote:
azreal13 wrote:
Several members of the board have a long working relationship with Kirby, and in many cases probably (purely speculative on my part) are accustomed to him being in charge.

Coupled with the fact that Kirby is indeed the largest non-institutional investor, and something like third largest overall, it would take a massive ground shift to dislodge him if he doesn't want to go.

Indeed. But there are issues of corporate governance; it's their responsibility to ensure the company is well-run, so the finance experts on the board they have, who've worked for banks etc, would have a duty to do something if they think he's running the company into the ground. That's why I don't think simply losing market share, hiking prices, and having no social media policy, is likely to get him the boot.
It would have to be a high-profile mistake that's directly attributable to him.

He's been quite good at drawing the sting of criticisms, though, if memory serves he acknowledged the one-man stores were a mess.

He blamed the fall of revenue on the changeover to one man stores and the disruption caused in it's entirety, which stretches my credulity somewhat.

As for the directors..

Games Workshop Investor Relations wrote:Executive directors
Tom Kirby (age 63), chairman and acting CEO. Tom Kirby joined Games Workshop in April 1986 as general manager and led the management buy-out in December 1991, becoming chief executive at that time. Between 1998 and 2000 he took on the role of non-executive chairman, returning to the role of chief executive in September 2000. He performed the role of chairman from December 2007 to January 2013 when he became chairman and acting CEO. Prior to joining Games Workshop, Tom worked for six years for a distributor of fantasy games in the UK and was previously an Inspector of Taxes.

Kevin Rountree (age 43), COO. Kevin Rountree joined Games Workshop in March 1998 as assistant group accountant. He then had various management roles within Games Workshop, including head of sales for the Other Activities division (including Black Library, licensing and Sabertooth Games). During the year ended 29 May 2011, he took on the responsibility of managing the Group’s service centres globally. To reflect this, his title was changed to chief operating officer from chief financial officer. He, however, still retains responsibility for all financial matters within Games Workshop. He qualified as a chartered management accountant in August 2001. Prior to joining Games Workshop, Kevin was the management accountant at J Barbour & Sons Limited and trained at Price Waterhouse.

Independent directors
Chris Myatt (age 69). Chris Myatt is the senior independent director, joining the board on 18 April 1996. He is a director of the Douglas Macmillan Hospice and was formerly a divisional managing director within Tarmac PLC.

Nick Donaldson (age 59). Nick Donaldson was appointed to the board on 18April 2002. A barrister by profession, Nick is a partner of London Bridge Capital Limited. Nick was, until 2003, head of corporate finance at Arbuthnot Securities Limited and previously held senior investment banking positions at Robert W Baird Limited and at Credit Lyonnais Securities. He is chairman of DP Poland PLC and a director of The Fulham Shore plc.

Elaine O’Donnell (age 43). Elaine O’Donnell was appointed to the board on 28 November 2013. A chartered accountant by profession, until recently Elaine was a corporate finance partner with EY.

That's a very small number of people with a lot of time served under their collective belts. (O'Donnell aside.) I'd really be surprised if they hadn't lost a proportion of any professional objectivity given their history together, and while there may be something Kirby could conceivably do to get himself drummed out, given his apparent stance of conservatism and risk avoidance, I doubt it'll happen before he grabs his golden parachute and jumps.

**SickSix**

Peregrine wrote:
Toofast wrote:
Why would a company with no debt and £9mil in the bank that still turns a profit month after month and year after year be in any danger of going under?

Because you have to look at trends, not single reports. And what we see now is that GW is losing market share and sales volume with no apparent hope of turning it around. Sure, they've kept the profit numbers acceptable, but only because of aggressive cost cutting and price increases (including day-1 DLC and larger, more expensive kits). And eventually GW are going to reach a point where there's nothing left to cut without making obvious sacrifices in quality, and prices can't go up any higher without sacrificing so many sales that it's a net loss. Meanwhile the rules are an absolute disaster, model releases are inconsistent in quality, and GW doesn't seem to see any problem with that. So that means that GW isn't ever going to increase sales by producing a superior product, they're entirely dependent on trying to milk the cash cow more efficiently and extract the maximum possible profit from their declining customer base.

And no, this doesn't mean that GW will collapse overnight. Most of their shareholders probably have no clue about GW's products and just look at the financial report, so it will probably be a while before they run out of ways to cover up the bad numbers and see a real collapse in stock prices. For example, the next financial report will include a sales spike from 7th edition, so it will probably look a lot better than a "normal" report and that will keep the shareholders happy a bit longer. But I wouldn't bet anything on GW's long-term future.

This. Exactly this. The proof is in the financial reports and observing their changing policies. It's not rocket science.

**insaniak**

clively wrote:
If you believe that minimum wage doesn't have a large impact on pricing then you don't know much about how things work. Prices are based upon people's ability and willingness to pay.

Exactly. Which is why minimumwage will affect the price of necessities and basic goods, while pricing of luxury goods is down more to disposable income (which people on minimum wage don't have a heck of a lot of) and brand perception.

And that's ignoring the fact that back in 2002 when the Australian dollar crashed to under US50c, GW prices here in OZ were raised to compensate. When the Oz Dollar increased over the ensuing decade to sit just under the US dollar, there was no corresponding price drop... just the usual annual-ish price rises up until the last couple of years when they decided to start bringing the rest of the world up to match our prices.

We're not more expensive because of a higher minimum wage. We're more expensive because our pricing is based on a decade-old exchange rate.

**Mechanical Crow**

And just a note of stormclaw, its not sold out, the Webstore pre order allotment sold out. GW stores will have 20+ copies each not to mention all the indys.

So its not some staggering GW victory, they low balled the allotment number to artificially generate hype and give you a sense there is a shortage.

**jamesk1973**

TheCustomLime wrote:
Games Workshop thinks too highly of itself in general. They believe that their products are the best, that all their customers want to do is buy their stuff and that they are above the rest of the TTG market. Their arrogance will be their downfall.

Word!

**Davor**

Mechanical Crow wrote:
And just a note of stormclaw, its not sold out, the Webstore pre order allotment sold out. GW stores will have 20+ copies each not to mention all the indys.

So its not some staggering GW victory, they low balled the allotment number to artificially generate hype and give you a sense there is a shortage.

Damn. Wish I knew that. Just spent my money on X-wing and Attack Wing thinking, I will not be able to get it because it's sold out. Oh well, GW wants to be silent, my money goes else where. I don't hinge on what GW might or might not do.

**slowthar**

clively wrote:
insaniak wrote:
stopcallingmechief wrote:
Not trying to crap all over australia but when your minimum wage is $16 and its $10 in canada and what, $7 something in america things will and should cost more.

Minimum wages are irrelevant to whether or not people should be charged a fair price. But we don't need to derail another thread with the same old arguments about equal pricing in a global market.

If you believe that minimum wage doesn't have a large impact on pricing then you don't know much about how things work. Prices are based upon people's ability and willingness to pay. Forget anything you might have been told about production costs or anything like that. Those just represent a starting point to determine if a product is viable. The MSRP for a product is based upon what the target group is able and willing to pay and the profit the seller is willing to accept. That is exactly what defines "fair". If you personally aren't willing to pay the price, then you don't need to buy it.

Every single time minimum wage increases, the cost of basics such as milk, bread, clothing, housing, etc will go up. That's not because it suddenly costs that much more to produce - the human labor component in most of those items is neglible - it's because the people are now able and willing to pay more. It usually takes about 3 months after a mandated min wage increase before things "balance" back to how they were before.

It's really not that complicated and makes complete sense if you think about it.

If you really want price parity (same product, same price regardless of location) - then wages have to be normalized across the globe. There are a LOT of things that would have to change to make this happen. Not the least of which is governments giving up on imposing tariffs and various trade restrictions based on origination of the product. Then, you'd also have to have similar education levels so that the distribution of skilled workers was such that location no longer mattered. Good luck with that as the only real way to make it happen would be to have a single world government.

I find your post interesting but, in this context, incorrect. The price of milk, bread, and other essentials go up due to minimum wage, yes, however the production of those things is more localized than the production of cheap plastic in a global economy.

Grocery stores have those stupid "discount" cards so they can determine what stuff you'll buy regardless of if it's on sale or not and charge you as much as possible. However, that's not the case here. We get iPhones, computers, crappy furniture, TVs, clothing, and whatever else at a ridiculously low price because we're part of a global economy and the fact of the matter is places like China and Malaysia have dirt cheap labor that they can exploit to manufacture those things. That establishes an expectation of price for certain goods, regardless of if it's fair or not. The exchange rate for currencies modifies that to a certain extent, but beyond the influence that a countries' minimum wage has on that exchange rate, their minimum wage is irrelevant to what the price of manufactured plastic toy soldiers are... in theory.

Personally, I think in this case the company is run by Brits who are petty and just wanna stick it to the Aussies, but what do I know?

======

Ironically I didn't quote the rest of your post because I agreed with it and would like to subscribe to your news letter.

Also, to keep this lengthy post somewhat on topic, I'll toss my two cents in, since I've been lurking for the whole thing:

I don't think GW is going to do the insta-tank that TSR did because they have *slightly* better business sense (i.e. Risk Adversity) than to expose themselves to the inventory reverse-buyout that sunk TSR seemingly overnight, however I do think their lack of foresight is going to lead them into an isolated subsection of the market where they are a much small player than they have been for the past 30 years. They will continue to exist, but become more and more irrelevant as other companies that embrace the Internet, social media, and customer relations continue to make headway. Think of any industry where some people come in on a "dumbed down" version of the product and then quickly progress to a more advanced version, and that's what GW will be.

**jonolikespie**

Are GW the dumbed down version in that scenario?

You make some good points and GW don't have the buyback problem that sank TSR but they do have a huge chain of international stores. I think the cost of those stores will drag them under in the next couple of years. It would be easy to get rid of them and focus on direct and FLGS sales but this has been a problem for a while now and GW just keep doubleing down and opening more stores.