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 agnosto wrote:
I vote with my wallet. If they produce a product that is a good value (to me) and that I'm interested in, I buy it to reward their good behavior.

Case-in-point, the new "get started" bundles. The price was right (at discount) and so bought some.

The problem historically is that GW seems dense when it comes to such things and incapable of realizing why items sell so well.

GW is a miniatures company, not a market research company, so obviously they wouldn't care how to make product sell well.

 Tinkrr wrote:

 agnosto wrote:
I vote with my wallet. If they produce a product that is a good value (to me) and that I'm interested in, I buy it to reward their good behavior.

Case-in-point, the new "get started" bundles. The price was right (at discount) and so bought some.

The problem historically is that GW seems dense when it comes to such things and incapable of realizing why items sell so well.

GW is a miniatures company, not a market research company, so obviously they wouldn't care how to make product sell well.

Sorry, what?

 Grimtuff wrote:

 Tinkrr wrote:

 agnosto wrote:
I vote with my wallet. If they produce a product that is a good value (to me) and that I'm interested in, I buy it to reward their good behavior.

Case-in-point, the new "get started" bundles. The price was right (at discount) and so bought some.

The problem historically is that GW seems dense when it comes to such things and incapable of realizing why items sell so well.

GW is a miniatures company, not a market research company, so obviously they wouldn't care how to make product sell well.

Sorry, what?

To quote Kirby, "Market research is otiose in a niche".

 Tinkrr wrote:

 agnosto wrote:
I vote with my wallet. If they produce a product that is a good value (to me) and that I'm interested in, I buy it to reward their good behavior.

Case-in-point, the new "get started" bundles. The price was right (at discount) and so bought some.

The problem historically is that GW seems dense when it comes to such things and incapable of realizing why items sell so well.

GW is a miniatures company, not a market research company, so obviously they wouldn't care how to make product sell well.

That makes no sense.

 MWHistorian wrote:

 Tinkrr wrote:

 agnosto wrote:
I vote with my wallet. If they produce a product that is a good value (to me) and that I'm interested in, I buy it to reward their good behavior.

Case-in-point, the new "get started" bundles. The price was right (at discount) and so bought some.

The problem historically is that GW seems dense when it comes to such things and incapable of realizing why items sell so well.

GW is a miniatures company, not a market research company, so obviously they wouldn't care how to make product sell well.

That makes no sense.

Of course not, that's why he said it; he's the king of random comments in a document that should discuss the business.

Really? I thought the sarcasm was good and to the point.

GW's main argument in everything is "they are a miniatures company" and Kirby has defiantly proclaimed that market research is useless putting the two together you have the above comment.

Simple, elegant and sarcastic.

 PsychoticStorm wrote:
Really? I thought the sarcasm was good and to the point.

GW's main argument in everything is "they are a miniatures company" and Kirby has defiantly proclaimed that market research is useless putting the two together you have the above comment.

Simple, elegant and sarcastic.

If it was sarcasm, then I applaud it. But lately its hard to tell what's purposefully absurd when defending GW.

 MWHistorian wrote:

 PsychoticStorm wrote:
Really? I thought the sarcasm was good and to the point.

GW's main argument in everything is "they are a miniatures company" and Kirby has defiantly proclaimed that market research is useless putting the two together you have the above comment.

Simple, elegant and sarcastic.

If it was sarcasm, then I applaud it. But lately its hard to tell what's purposefully absurd when defending GW.

Poe's law strikes again.

 Grimtuff wrote:

 MWHistorian wrote:

 PsychoticStorm wrote:
Really? I thought the sarcasm was good and to the point.

GW's main argument in everything is "they are a miniatures company" and Kirby has defiantly proclaimed that market research is useless putting the two together you have the above comment.

Simple, elegant and sarcastic.

If it was sarcasm, then I applaud it. But lately its hard to tell what's purposefully absurd when defending GW.

Poe's law strikes again.

Only the unemployed Cypriots know for sure....

The Auld Grump

Sheepherders in Botswana, the guys who really cause world financial chaos.

Ok, can someone explain this part to me:

The report has a line of "basic earnings per share" - 14.9p and another line "dividend per share in the period" 20p

Does the first line take the profits and divide them out through the shares? And if it does, then they are paying out a lot of money that they didn't make this year. And they did the same thing last year (14.5p earned, 36p paid).

Which means they are shrinking the company overall.

Am I reading this right?

For those wondering, it was sarcasm, making light of how GW constantly tries to claim it isn't a game company, but rather a minis company so things like rule sets and FAQs are an after thought. The second part is about them stating they don't do market research on their product as a whole, with some rumours going as far as GW does market research by walking into a store, sees one table available in the store with two people playing and eight watching, and then concludes that only 20% of people buying their product play the game. Seriously though, they simultaneously state that they don't do market research, while also claiming percents of how many people play versus how many only collect. So they either do market research or they literally make up those numbers, and I no longer know which is the case with them.

Also, thank you to the person who first understood what I was getting at, and for those who appreciated the humour of it. I grew up watching Daria D:

 odinsgrandson wrote:
Ok, can someone explain this part to me:

The report has a line of "basic earnings per share" - 14.9p and another line "dividend per share in the period" 20p

Does the first line take the profits and divide them out through the shares? And if it does, then they are paying out a lot of money that they didn't make this year. And they did the same thing last year (14.5p earned, 36p paid).

Which means they are shrinking the company overall.

Am I reading this right?

Unless someone with actual business experience wants to come and tell me I'm an idiot, yes I believe that is the correct understanding. This is a company that has in the past borrowed money to pay out dividends and in recent years has found itself in a position where if it doesn't pay them out investors will drop the stock, causing the price of the stock to fall.

 odinsgrandson wrote:
Ok, can someone explain this part to me:

The report has a line of "basic earnings per share" - 14.9p and another line "dividend per share in the period" 20p

Does the first line take the profits and divide them out through the shares? And if it does, then they are paying out a lot of money that they didn't make this year. And they did the same thing last year (14.5p earned, 36p paid).

Which means they are shrinking the company overall.

Am I reading this right?

It's not that simple, because you can't view an income statement, balance sheet, or statement of cash flows in isolation meaningfully. There are many factors: you need to compare the number of shares outstanding, extraordinary charges, amount of cash on hand, receivables, conversion of inventory, disposition of equipment, capital and non-capital asset accumulation, and so on.

Generally, if you see a company pay out more in dividends than it earned, you should ask, "how?". The most obvious thing to check is the company's cash equivalents (current assets) -- if this has gone down, the company is accomplishing higher dividends by paying out cash it has on hand, and that may be okay, or it may be a terrible idea, depending on whether the company needs the money. Irrelevant in GW's case, because its current assets actually increased by a million GBP in the period. So, the most obvious second possibility is simply that the company's cashflow outperformed its earnings,

Comparing EPS (earnings per share) in Period 1 versus Period 2 is less useful than comparing revenues , because at the minimum you'd also have to ask how many shares there were outstanding. If the earnings per share were lower, but there were more shares, that's neither here nor there. And if EPS went up, but the company bought back some shares, that wouldn't be anything to get excited over either.

Anyways, the short answer is that there's really no short answer. Instead of looking at the dividends per share as a measure of the company expanding or contracting, at a minimum, look instead at the change in position of cash, receivables and current assets (which generally went up compared to 2014); look at the revenues, and consider the difference in capital spending (if a company buys equipment that's good for 20 years and therefore has less cash, that's not necessarily a bad thing). Even that is grossly oversimplified, as there can still be good reasons why something is the way it is.

In GW's case, there may be some contraction that you can infer, depending on how you define it, based on essentially flat sales versus increased prices (implying that they're selling fewer models/books), but it's not something we have data on, and might not be accurate. You can't reasonably deduce that the company is shrinking (or at least, I can't) from glancing at the financial statements. It's looks pretty much "more of the same" to me.

 Talys wrote:
In GW's case, there may be some contraction that you can infer, depending on how you define it, based on essentially flat sales versus increased prices (implying that they're selling fewer models/books), but it's not something we have data on, and might not be accurate.

Might not be accurate? What are the other possible outcomes? That they produced some sort of loss leader and sold a billion copies, so sales volume is WAY up, but profits from sales are flat? We know GW doesn't produce any products like this and they noted that losses in core retail were offset by non-core (i.e. licensed product). I'm not sure how much clearer this needs to be.

Give up, he'll just write a wall of text about how duck migration patterns mean GW actually pulls in billions of pounds in profits. Geez, I own stock and I don't even go through the mental gymnastics involved in some of these posts.

Edit.

In answer to the question about eps vs dividends. EPS is calculated after preferred stock dividends are paid so what likely happened is GW EPS is flat then preferred stock dividends were paid which resulted in an EPS lower than dividend.

 Sinful Hero wrote:

 RiTides wrote:

Half-Year Report wrote:To broaden our core trade product reach, in the period, we have designed a small new product range and are at present actively signing up distribution agents to sell this product into North America. We continue to work on other product formats to optimise other opportunities.

Is this referring to Age of Sigmar, or something else that is coming...?

I'd assume since AoS is using the old fantasy kits it's not really a "new" product range. I'd think it's something else-perhaps involving the specialist games?

Not really a new product line in part, but a new IP.

Sales income is down while prices are up. We can infer that sales numbers are down but we don't know for certain, though it's hard to think of another reason.

Profits are up because, for one thing, GW have improved their COGS from 25% to 20% of retail price.

 Kilkrazy wrote:
Sales income is down while prices are up. We can infer that sales numbers are down but we don't know for certain, though it's hard to think of another reason.

Profits are up because, for one thing, GW have improved their COGS from 25% to 20% of retail price.

Yep. You speak the truth good sir. Efficiencies are great ways for companies in decline to pinch pennies and pad their balance sheet. Whatever his other deficiencies, Kirby has been very good at finding opportunities to improve efficiency.

“The role I had in the studio was with staff working on game development and design, and they’d pretty much decided that game development and design wasn’t of any interest to them. The current attitude in Games Workshop is that they’re not a games company, it’s that they’re a model company selling collectibles. That’s something I find wholly self-deceiving and couldn’t possibly agree with.”
-- Rick Priestly

frozenwastes wrote:
“The role I had in the studio was with staff working on game development and design, and they’d pretty much decided that game development and design wasn’t of any interest to them. The current attitude in Games Workshop is that they’re not a games company, it’s that they’re a model company selling collectibles. That’s something I find wholly self-deceiving and couldn’t possibly agree with.”
-- Rick Priestly

Quod erat demonstrandum.

 keezus wrote:

 Talys wrote:
In GW's case, there may be some contraction that you can infer, depending on how you define it, based on essentially flat sales versus increased prices (implying that they're selling fewer models/books), but it's not something we have data on, and might not be accurate.

Might not be accurate? What are the other possible outcomes? That they produced some sort of loss leader and sold a billion copies, so sales volume is WAY up, but profits from sales are flat? We know GW doesn't produce any products like this and they noted that losses in core retail were offset by non-core (i.e. licensed product). I'm not sure how much clearer this needs to be.

Well, first of all, you need to define what contraction is. In 2014 if someone bought 4 boxes of tactical marines (40 models or 4 kits) and in 2015 they bought 1 imperial knight, at essentially the same selling price but at a vastly smaller cost, is this "contraction"? I don't think so?

To me, contraction could be either: in 2014, someone buys 4 boxes of models at $30; in 2015, someone buys 3 boxes of models at $40. Or, in 2014, there are 10,000 people spending $500; and in 2015, there are 5,000 people spending $1,000.

If GW is shifting from small, cheaper models to bigger more expensive models that have a lower cost of goods sold, determining contraction is difficult. Or, for that matter, producing expensive single characters (whether characters or Primarchs). Or $500 Smaug models -- Is someone buying a copy of Smaug contraction, when compared to ten $50 boxes of Skaven? We could talk in circles about that -- you could easily say, "but the person who buys Smaug isn't going to buy another $500 model next year!". But you could be wrong, too; they might buy a $2,000 Warlord. And maybe the next year, whatever next bigger and more expensive model GW produces.

By the way, when I said that we can infer contraction based on higher prices/lower volumes, I actually meant, there is *probably* some level of contraction in the playerbase and some level of contraction in units sold, but we don't know this as a fact. I don't believe that there's any question that GW's business is changing from making small models and games for them to something else (which I think is what a lot of people just hate, because they want a wargame for small models). I think that the number of hobbyists interested in this is smaller, too, though each of the hobbyists that is their target is probably more profitable, but I have no proof of any of this, hence, I theorize contraction in the fanbase.

To take an analogy, if a coffee shop goes from selling coffee to selling coffee and food, and over the years shift to more food products and less coffee, based solely on financial statements, it's very hard to compare one year to the last and say, "is this company growing or shrinking", because you have no idea what percentage of their revenue is derived from coffee versus food between one year and the next. Plus, is growth defined as more customers, or customers spending more on each visit? I'm sure you see what I mean.

That it's got nothing to do with the price of tea in China?

Joyboozer wrote:
That it's got nothing to do with the price of tea in China?

If that was directed at me, I think that whether GW is expanding or contracting, and to what degree, is a legitimate question relevant to their financials.

 Talys wrote:

If that was directed at me, I think that whether GW is expanding or contracting, and to what degree, is a legitimate question relevant to their financials.

Once you factor out the increased licensing revenue from shovelware, they had a decrease in profits and revenue whilst increasing prices on pretty much every new release. Therefore, in their core business they are selling less. How can that be anything other than contracting?

Of course, if Warhammer: Total War takes off, it might eclipse model sales, so I guess if they were to shift to an IP company you could argue they were expanding, right up until Warhammer: Total War goes out of fashion and they tank entirely because they'd have nothing else to throw at the wall to see what sticks.

@Herzlos -

Like I said, it depends on what you mean by "contracting". If it's defined as profit from models, under constant currency (which is a legitimate use of it, when evaluating whether a company is growing or shrinking), profits haven't changed much either way.

We could surmise: "GW sold fewer models and made more money off of them. Therefore they are contracting."

But that MIGHT not be an accurate conclusion. Like I said, it's one thing if sales went from 4 tactical boxes at $30 to 3 tacticals at $40. But it's a whole other thing people are buying titans at $120 instead. Is someone buying a titan instead of 4 boxes of troops "contracting"?

I think that's not a useful comparison, because they're different things. Ultimately, if GW can make a good business out of selling a lot of titans to people who used to buy tacticals, shareholders and management wouldn't consider that a contraction of any sort, especially since titans better differentiate GW from its competitors.

You could also define contracting as a reduction in playerbase; and even though I (personally) suspect this is true, we don't have anything but anecdotal observation for this.

You could also define contracting as a reduction in the number and reach of retail stores, in which case GW is actually expanding, globally (more stores), or perhaps contracting, globally (less total staff in those stores... maybe?). Or you could say, number of stores in the world where GW can be bought; and I have no idea about how this has grown or shrunk.

Unless GW is a magic, special unicorn and somehow universal business principals and terms don't apply, contraction will mean a general economic decline and indicate one of the 4 stages of the business cycle (expansion, peak, contraction, trough). I would argue that since their income is still in decline, they haven't quite reached trough yet, though this report seems to indicate they might be close. Once their revenue levels off, how long they remain static will depend on policies moving forward but I'm not too concerned as Mr. Rountree has already outlined some of the company's growth plan. Of course, whether it all works or not will be the proof in the proverbial pudding.

If you're talking about the business cycle, GW is a pretty good example of a company that has a period of relatively rapid expansion, followed by many consecutive periods decline (or at least, stagnation). Of course, looking at trends that span decades, it's not like a company can only have one boom cycle; given that GW has proven to be a pretty durable company, at some point, they'll probably have a hit (even if it's just by luck) and they'll start that cycle anew.

But I when I was talking about contraction, I was not referring to the business cycle - I was speaking to the growth or decline of the customer base, global reach, revenues, profits, offerings, and facilities.

It's clear that sales have declined, and profits have increased. This is probably due to fewer customers (it's not likely due to more customers spending less money each) while GW have improved their COGS significantly from about 25% to about 20%.

Facilities fluctuates. I think they have more shops now than a few years ago, but they are smaller with fewer staff. OTOH they had more shops maybe 10 years ago than now, and they tended to be larger and in more attractive locations. This is of course a general picture.

The number of regional facilities and HQs has been drastically cut. GW closed all the regional offices including the US based manufacturing and distribution centre.

Design studio staff numbers have increased a lot.

IDK about the number of offerings. It would vary a lot over 10 years due to dropping and specialist games, introducing The Hobbit, dropping WHFB and introducing AoS. They've got more terrain kits and varieties of paint. At a guess there are probably more SKUs available now than 10 years ago.

 Talys wrote:
If you're talking about the business cycle, GW is a pretty good example of a company that has a period of relatively rapid expansion, followed by many consecutive periods decline (or at least, stagnation). Of course, looking at trends that span decades, it's not like a company can only have one boom cycle; given that GW has proven to be a pretty durable company, at some point, they'll probably have a hit (even if it's just by luck) and they'll start that cycle anew.

But I when I was talking about contraction, I was not referring to the business cycle - I was speaking to the growth or decline of the customer base, global reach, revenues, profits, offerings, and facilities.

Which are all part of a normal business cycle and actually part of the contraction period of the cycle. We've seen GW contract over the last several years and we've read what the new CEO states that they plan to do about it but before these planned changes take effect, we'll see thing bottom out (trough) and then the climb can start (expansion). They'll start to expand first which will cause the rate of contraction to ease and then, hopefully, reverse. How long the trough lasts depends on how well the planned changes are received by customers.