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Honestly this doesn't surprise me much. What surprised me was that they didn't drop off a cliff during the last few years when AoS first dropped and 40k was borderline unplayable. It made me realize that their core business really is the "hobby" a their paints, miniatures, and the game is secondary to many of their customers who really can be classified as collectors.

It doesn't describe me, but the numbers tell the story. Now that they've stopped actively antagonizing their own customers and working in a sealed culture bubble I'm not surprised they are doing well.

 ZebioLizard2 wrote:

Mitochondria wrote:
I'm not happy about this.

Prices and rules are still gak.

GW should he punished, not rewarded for their behavior.

Punished for what behavior exactly?

Having customers that dare to disagree with Mitochondria I guess?

streetsamurai wrote:If im not mistakem, only the revenue are adjusted at constant currency, not the profit.

Edit: after looking more closely at the latest financial, the profit is also given in cc in some later page. And the growth is still fairly impressive. So GW growth seems to be in no way mainly dependant on the brexit

The growth is more than impressive. In North America it's been ridiculously good.

As for constant currency, I've tried explaining this a few times but I'm not doing a very good job of it I think. It's an accounting tool used to make sure that underlying revenue figures are not hidden by a currency shift. It allows investors to see whether your overseas operations are actually doing better or worse, without the final sum being masked by a currency shift. Basically, when everyone keeps saying "GW's foreign income is worth more now because of the currency shift", that's what constant currency figures are designed to account for and remove from the final tally. What constant currency figures do not account for is increased sales because your product is cheaper now overseas, because that's not how constant currency works.

For example;

phillv85 wrote:Brexit will have played its part, but is not going to be the only reason they have had a bumper year.

For a company that sells 70% of its product overseas it would have made an extra 10-20% when converting the USD to GBP since the Brexit vote depending on the time of conversion and up to 18% on Euro transactions.

It sounds like they have made considerably more than the extra 20% (absolute maximum from currency conversions) in revenue this year.

This is exactly what the constant currency figures have already accounted for. They've eliminated the raw percentage shift from the currency movement. What's left is the genuine increase in like for like sales. The constant currency calculation does not however account for increased sales caused by the product becoming cheaper to import due to the currency movement. There really is no tool as such for doing that. The best we can do is look at their firgures in different markets and over time to make reasoned deductions.

So for example, we know that UK growth was ok, but not spectacular, from mid-2016 to mid-2017. We know they shut some of their worst performing stores and opened some new ones like the "flagship" Tottenham Court Road store (which was supposedly the test bed for a new store design/branding). They invested in updating the merchandising and some of the other elements of their UK retail outlets, which returned them to profitability, albeit it only just. We also know that growth was much more sluggish in markets that benefitted less from the devaluation of the pound. Australia and New Zealand for example saw some growth, but it was pretty humble. We also know that the two markets that benefitted the most from the currency shift - the US and the EU - saw the biggest growth, by a massive margin.

It's probable therefore, (but by no means certain) that the biggest influencing factor was the currency shift reducing prices in the US and EU markets. Even if they just stopped a potential price increase, that alone can be valuable. The timing meshes with the release of the AOS general's handbook, but then in that case we should have seen big increases in the UK and AUS/NZ markets, unless these markets have hit close to their saturation point, which is unlikely given the past sales history of GW.

Another alternative of course is that GW is cooking its books, but that's highly unlikely

dosiere wrote:Honestly this doesn't surprise me much. What surprised me was that they didn't drop off a cliff during the last few years when AoS first dropped and 40k was borderline unplayable. It made me realize that their core business really is the "hobby" a their paints, miniatures, and the game is secondary to many of their customers who really can be classified as collectors.

It doesn't describe me, but the numbers tell the story. Now that they've stopped actively antagonizing their own customers and working in a sealed culture bubble I'm not surprised they are doing well.

Except they almost did. Well, I say almost, they only made £13 million odd profit (after tax) in the year ending May 2016, which by GW standards is not great. They acknowledged openly that they'd had a terrible Christmas period and that the business was not performing the way they'd hoped, which is why they started to make some changes. Then they appear to have been handed the golden boost on a platter with the Brexit vote.

bouncingboredom wrote:

streetsamurai wrote:If im not mistakem, only the revenue are adjusted at constant currency, not the profit.

Edit: after looking more closely at the latest financial, the profit is also given in cc in some later page. And the growth is still fairly impressive. So GW growth seems to be in no way mainly dependant on the brexit

The growth is more than impressive. In North America it's been ridiculously good.

As for constant currency, I've tried explaining this a few times but I'm not doing a very good job of it I think. It's an accounting tool used to make sure that underlying revenue figures are not hidden by a currency shift. It allows investors to see whether your overseas operations are actually doing better or worse, without the final sum being masked by a currency shift. Basically, when everyone keeps saying "GW's foreign income is worth more now because of the currency shift", that's what constant currency figures are designed to account for and remove from the final tally. What constant currency figures do not account for is increased sales because your product is cheaper now overseas, because that's not how constant currency works.

For example;

phillv85 wrote:Brexit will have played its part, but is not going to be the only reason they have had a bumper year.

For a company that sells 70% of its product overseas it would have made an extra 10-20% when converting the USD to GBP since the Brexit vote depending on the time of conversion and up to 18% on Euro transactions.

It sounds like they have made considerably more than the extra 20% (absolute maximum from currency conversions) in revenue this year.

This is exactly what the constant currency figures have already accounted for. They've eliminated the raw percentage shift from the currency movement. What's left is the genuine increase in like for like sales. The constant currency calculation does not however account for increased sales caused by the product becoming cheaper to import due to the currency movement. There really is no tool as such for doing that. The best we can do is look at their firgures in different markets and over time to make reasoned deductions.

So for example, we know that UK growth was ok, but not spectacular, from mid-2016 to mid-2017. We know they shut some of their worst performing stores and opened some new ones like the "flagship" Tottenham Court Road store (which was supposedly the test bed for a new store design/branding). They invested in updating the merchandising and some of the other elements of their UK retail outlets, which returned them to profitability, albeit it only just. We also know that growth was much more sluggish in markets that benefitted less from the devaluation of the pound. Australia and New Zealand for example saw some growth, but it was pretty humble. We also know that the two markets that benefitted the most from the currency shift - the US and the EU - saw the biggest growth, by a massive margin.

It's probable therefore, (but by no means certain) that the biggest influencing factor was the currency shift reducing prices in the US and EU markets. Even if they just stopped a potential price increase, that alone can be valuable. The timing meshes with the release of the AOS general's handbook, but then in that case we should have seen big increases in the UK and AUS/NZ markets, unless these markets have hit close to their saturation point, which is unlikely given the past sales history of GW.

Another alternative of course is that GW is cooking its books, but that's highly unlikely

dosiere wrote:Honestly this doesn't surprise me much. What surprised me was that they didn't drop off a cliff during the last few years when AoS first dropped and 40k was borderline unplayable. It made me realize that their core business really is the "hobby" a their paints, miniatures, and the game is secondary to many of their customers who really can be classified as collectors.

It doesn't describe me, but the numbers tell the story. Now that they've stopped actively antagonizing their own customers and working in a sealed culture bubble I'm not surprised they are doing well.

Except they almost did. Well, I say almost, they only made £13 million odd profit (after tax) in the year ending May 2016, which by GW standards is not great. They acknowledged openly that they'd had a terrible Christmas period and that the business was not performing the way they'd hoped, which is why they started to make some changes. Then they appear to have been handed the golden boost on a platter with the Brexit vote.

Yeah, I know what CC is. But the thing is, the product has not gotten cheaper (bar for FW), cause, unless I'm mistake, a retailer buy GW product from GW North-America (and they get charged in US dollars) (and the price has not changed since the Brexit AFAIK). If a US retailer had to pass by GW UK, then the pound devaluation would have helped them, but presently, since GW is regionally structured, i'm pretty sure it's not the case.

There are still two options, both of which utilise a degree of creative accounting. One is to use an unrealistic figure to do the constant currency calculation. Obviously the currency moves about during the year, but final accounting figures can only be adjusted by one block figure. By picking an unrepresentative figure you can basically fiddle the true currency adjusted figure. The other thing you can do is mess with totals by selective application of which year gets adjusted, so there's a difference in adjusting this years figures using last years currency rate vs adjusting last years figures using this years currency rate.

Well, you have shop owners in this thread saying they don’t get a discount even after Brexit, and their prices (in, say, USD) are the same as before. But you’re saying others do, and in fact a big chunk of GWs revenue increase comes from increased purchases from retailers who get presumably huge discounts so they can stockpile stuff. Where did you get this info? How do you know that these Brexit discounts are so widespread that we can attribute a large part of increased sales to them? And further, that GWs new policies and behaviour are secondary to the Brexit effect as you seem to imply?

The pound would have to lose a third of its value to cover a 50% increase in sales, and that's only if all sales were abroad and in other currencies. So obviously poppycock. I know my FLGS pays GW in pounds, and can offer a better discount when the pound is weak.

Mymearan wrote:Well, you have shop owners in this thread saying they don’t get a discount even after Brexit, and their prices (in, say, USD) are the same as before. But you’re saying others do, and in fact a big chunk of GWs revenue increase comes from increased purchases from retailers who get presumably huge discounts so they can stockpile stuff. Where did you get this info? How do you know that these Brexit discounts are so widespread that we can attribute a large part of increased sales to them? And further, that GWs new policies and behaviour are secondary to the Brexit effect as you seem to imply?

I believe it was people who used to own shops in this thread, and this being the internet I can't verify their statements, so all I have to work with is the fixed, known variables available to me. The issue of Brexit discounts driven (I'm still crunching some maths on the possibility of a constant currency fudge) as opposed to GW policy/behaviour driven is that if it was policy/behaviour then we would expect to see broadly similar increases across the board in all territories. Instead what we're seeing are modest increases in sales in places like UK/AUS, but much, much larger increases in the territories that gained the most advantage from the currency movement, those being the US and EU. It's never going to be all one factor, if it was purely currency related there would be very little UK movement yet there has been some, so it's more a question of "what is the predomnating factor?"

Logical deduction would at this point lead us to something currency related being the predominant factor.

lord_blackfang wrote:The pound would have to lose a third of its value to cover a 50% increase in sales, and that's only if all sales were abroad and in other currencies. So obviously poppycock. I know my FLGS pays GW in pounds, and can offer a better discount when the pound is weak.

No it wouldn't. The pound could drop by say 5% and that discount could theoretically drive people overseas to buy 20% more product for example. That's a little extreme but it illustrates the point.

Pretty stunning turn around compared to what the old management were doing. Lets hope hubris does not take over.

Good for them, hope they dont make the same mistake they made with LOTR bubble.

 Formosa wrote:
Good for them, hope they dont make the same mistake they made with LOTR bubble.

To be fair I think with that bubble it was more the sudden nature of it that shocked GW. That and I think that they kind of felt that their new LotR sales figures were going to generate similar figures to their other ranges because the kind of person buying into the hobby was the same as their fantasy/40K lines. So the sudden drop off of casual buyers I think caught them by surprise; esp as unlike the action toy market and most others matured on film merchandise; GW didn't have another film franchise to launch people into.

They already stated something to the effect that future profits likely won't be this good so they're well aware of such a threat.

They're definitely learning from past mistakes.

 lord_blackfang wrote:
The pound would have to lose a third of its value to cover a 50% increase in sales, and that's only if all sales were abroad and in other currencies. So obviously poppycock. I know my FLGS pays GW in pounds, and can offer a better discount when the pound is weak.

Where are you located? It makes sense for minor markets to pay in GBP, but major markets which have their own distribution centers (USA, Australia/NZ) it makes much more sense for those distribution centers to sell in the local currency.

bouncingboredom wrote:

Mymearan wrote:Well, you have shop owners in this thread saying they don’t get a discount even after Brexit, and their prices (in, say, USD) are the same as before. But you’re saying others do, and in fact a big chunk of GWs revenue increase comes from increased purchases from retailers who get presumably huge discounts so they can stockpile stuff. Where did you get this info? How do you know that these Brexit discounts are so widespread that we can attribute a large part of increased sales to them? And further, that GWs new policies and behaviour are secondary to the Brexit effect as you seem to imply?

I believe it was people who used to own shops in this thread, and this being the internet I can't verify their statements, so all I have to work with is the fixed, known variables available to me. The issue of Brexit discounts driven (I'm still crunching some maths on the possibility of a constant currency fudge) as opposed to GW policy/behaviour driven is that if it was policy/behaviour then we would expect to see broadly similar increases across the board in all territories. Instead what we're seeing are modest increases in sales in places like UK/AUS, but much, much larger increases in the territories that gained the most advantage from the currency movement, those being the US and EU. It's never going to be all one factor, if it was purely currency related there would be very little UK movement yet there has been some, so it's more a question of "what is the predomnating factor?"

Logical deduction would at this point lead us to something currency related being the predominant factor.

lord_blackfang wrote:The pound would have to lose a third of its value to cover a 50% increase in sales, and that's only if all sales were abroad and in other currencies. So obviously poppycock. I know my FLGS pays GW in pounds, and can offer a better discount when the pound is weak.

No it wouldn't. The pound could drop by say 5% and that discount could theoretically drive people overseas to buy 20% more product for example. That's a little extreme but it illustrates the point.

GW
UK growth being weak after the Brexit compared to the other market probably is due to the difficult economic situation it caused in this country. Since GW stuff is pure hobby expense, it's pretty much the first thing that gets cut when the budget is a bit tighter

bouncingboredom wrote:
I believe it was people who used to own shops in this thread, and this being the internet I can't verify their statements, so all I have to work with is the fixed, known variables available to me.

No, I'm a current retailer. I opened my shop in 2009. GW's prices in the US, both direct from them and from all other major distributors, have remained completely unchanged since their last big price hike back in 2012 or 2013 or so. Have you considered the possibility that Australia's growth was lower because by all accounts GW's prices over there are obscene, which limits growth potential, and that the UK's growth was lower because GW is much more of a household name over there, meaning a much higher percentage of the potential market is already tapped? Those seem like more plausible explanations to me, considering Brexit had zero effect on US prices at any level of the supply chain. I can't speak for the EU, though.

I really doubt the Brexit vote had anything to do with an increase in sales of GW products in the US and the EU, since GW's prices have not changed at all. The only thing we in the US buy from GW in GBP are Forge Wold kits. Those prices were definitely affected by Brexit but FW is not large enough to account for this blossoming of profitability.

What is far more likely is that the management changes have pushed consumer confidence up. GW's core games are in a much healthier position today than they have been in probably 5 years or more. GW focusing on social media, GW focusing on sharing information, GW offering more bundles (with good discounts), GW releasing a more well rounded 40k game system, GW releasing lots of codexes, GW updating and FAQing on a consistent basis, etc. are all playing into this. GW has entered the 21st century and is embracing modernity. The buying public has very much rewarded GW for doing this.

Forums are so binary... it's not an either/or.

The Brexit effect is that sales they would have made anyway will have 100% definitely made them more money via currency exchange shenanigans. Weak pound = exports get you more money, and sales are more profitable. Of course they didn't pass that on to wholesalers/retailers and lower their prices! They kept it. No visible outward change + currency benefit = profit.

That they have delivered two revamped game systems, a bunch of splash releases and their best models for donkeys years in that time and driven sales up too is why the figures look so damn good.

It's not one or the other, both are reasons for the upswing.

 JohnnyHell wrote:
Forums are so binary... it's not an either/or.

The Brexit effect is that sales they would have made anyway will have 100% definitely made them more money via currency exchange shenanigans. Weak pound = exports get you more money, and sales are more profitable. Of course they didn't pass that on to wholesalers/retailers and lower their prices! They kept it. No visible outward change + currency benefit = profit.

That they have delivered two revamped game systems, a bunch of splash releases and their best models for donkeys years in that time and driven sales up too is why the figures look so damn good.

It's not one or the other, both are reasons for the upswing.

Logic and reason? How dare you.

 Mad Doc Grotsnik wrote:

 JohnnyHell wrote:
Forums are so binary... it's not an either/or.

The Brexit effect is that sales they would have made anyway will have 100% definitely made them more money via currency exchange shenanigans. Weak pound = exports get you more money, and sales are more profitable. Of course they didn't pass that on to wholesalers/retailers and lower their prices! They kept it. No visible outward change + currency benefit = profit.

That they have delivered two revamped game systems, a bunch of splash releases and their best models for donkeys years in that time and driven sales up too is why the figures look so damn good.

It's not one or the other, both are reasons for the upswing.

Logic and reason? How dare you.

I'll be burnt as a heretic soon, mark you.

streetsamurai wrote:
GW
UK growth being weak after the Brexit compared to the other market probably is due to the difficult economic situation it caused in this country. Since GW stuff is pure hobby expense, it's pretty much the first thing that gets cut when the budget is a bit tighter

The UK is doing well. Being British we like to complain about everything, particularly first world problems; "Ugh, it's so expensive now to take the kids abroad during the school holidays". Poor didums. The reality is that GW has had a rough time in recent years. They're headed in a better direction lately, but there's still a long way to go to unwind some of the mistakes of the past.

Benn Roe wrote:
No, I'm a current retailer. I opened my shop in 2009. GW's prices in the US, both direct from them and from all other major distributors, have remained completely unchanged since their last big price hike back in 2012 or 2013 or so. Have you considered the possibility that Australia's growth was lower because by all accounts GW's prices over there are obscene, which limits growth potential, and that the UK's growth was lower because GW is much more of a household name over there, meaning a much higher percentage of the potential market is already tapped? Those seem like more plausible explanations to me, considering Brexit had zero effect on US prices at any level of the supply chain. I can't speak for the EU, though.

To put some perspective on how much the UK market still has left in it, when I first started playing 40K (2nd edition, aging myself a little) they used to run TV adverts, had distribution deals with major high street retailers, and gaming groups exclusive to GW products were everywhere with very solid numbers (our school, in a fairly small town 10 miles from the nearest GW store had 20 regulars at the group and a lot more people who played but didn't attend the group). Now they're running with one-man stores for the most part. They're a long way from their heyday, but with the right approach they could probably get back there.

Anyway, to the point. I did some very, very crude number crunching and by using what I think is a more realistic constant currency adjustor you get figures from the US and EU which are much more comparable with those from the rest of the world, still showing good growth in underlying sales (new stores, new products like AOS handbook, recovering from a rough year in 2015/16) but a little less hyperbolic shall we say. Smiles all round

Red_Five wrote:What is far more likely is that the management changes have pushed consumer confidence up. GW's core games are in a much healthier position today than they have been in probably 5 years or more. GW focusing on social media, GW focusing on sharing information, GW offering more bundles (with good discounts), GW releasing a more well rounded 40k game system, GW releasing lots of codexes, GW updating and FAQing on a consistent basis, etc. are all playing into this. GW has entered the 21st century and is embracing modernity. The buying public has very much rewarded GW for doing this.

I wouldn't hold your breath on that. I see a lot of peope grumbling already and it hasn't even been out that long. Any new release like this - especially of a game as important as 40K - is basically a license to print money. The volume orders from 3rd party retailers alone would have generated some healthy profits. Much hinges on where they go from here, in particular their strategy for retail outlets. It'll be an interesting next couple of years for sure.

 I see a lot of people grumbling already and it hasn't even been out that long.

Welcome to Dakkadakka.

Erm.....the UK isn’t doing well.....like, at all?

Growth revised downwards, wages stagnant, cost of living soaring...that’s not a healthy economy!

Sorry to hear that. :(

(Though I think it's safe to say you're not alone..)

 Mad Doc Grotsnik wrote:
Erm.....the UK isn’t doing well.....like, at all?

Growth revised downwards, wages stagnant, cost of living soaring...that’s not a healthy economy!

Guessing I know how that chap above voted... because I agree with you, 'doing well' we ain't.

Mad Doc Grotsnik wrote:Erm.....the UK isn’t doing well.....like, at all?

Growth revised downwards, wages stagnant, cost of living soaring...that’s not a healthy economy!

Do you have any idea how silly that sounds; "The UK isn't doing well at all because the OBR revised its annual growth forecast down slighty". So the economy is growing at a fairly sound rate, better than it has done in a while, but apparently now that's a sign it's not doing well? Not least the fact that a few days after the OBR did that, new data was released which cast doubt over their assertions and now there's growing talk that they may have grossly underestimated potential growth over the final quarter. Unemployment is at a record low level. Total active participation in the workforce is at a record high. Government borrowing throughout the year has been less than previously forecast because of unexpectedly higher tax income. Yeah, the roof is falling in...

And wages aren't stagnant. They're not growing as fast as some people hoped, which is a very different thing. Nor is the cost of living "soaring". Since Labour came to power back in '97 the target rate of inflation set by the government has been 2%, a target which the UK has consistently failed to achieve virtually every year since the target was introduced. Just a couple of years ago the main concern of government was that prices would enter deflation, which is a really serious place for an economy to be in. Now inflation is running at a little under 3%, not that far over the target rate and certainly much better than going the other way, and yet for some reason the BBC and the Guardian newspaper are losing their minds.

Meanwhile, anyone with a passing interest in economics recognises this as a) being actual a solid state of affairs. Not brilliant, but good. And b) being the after effect of almost a decade of wage growth outstripping price growth. We've been having it nice for a long time, some people are just getting upset because milk might go from being £1 for 4 pints to £1.03 for 4 pints.

Baron Klatz wrote:Sorry to hear that. :(

(Though I think it's safe to say you're not alone..)

It really isn't bad. Brexit has caused a lot of division and the current government is not particularly popular, even with their own side. As such there are a tremendous number of people who want the economy to fail just so they can get their own way. Think of them as being like that guy earlier in this thread who was hoping GW "gets what it deserves" or whatever it was he said. As always, politics does not mix well with economics.

For anyone not in the UK, the above post is more fantastical than space wizards firing mind bullets.

And anyway, the thread should be about the company that makes the space wizards.

No, it's mostly accurate. The economy is still growing, just more slowly than forecast, wages are going up, they're just not keeping track with inflation currently, but inflation itself is still fairly modest.

Basically there's sufficient information to support whichever political drum you wish to bang, but it's only going to be time that acts as a final arbiter in most cases.

But I'm not entirely sure how deep one can go on the wider socio economic implications of Brexit before you're effectively off topic.

 JohnnyHell wrote:
For anyone not in the UK, the above post is more fantastical than space wizards firing mind bullets.

And anyway, the thread should be about the company that makes the space wizards.

Except you're forgetting people outside the UK can check it and realise it's not.

 JohnnyHell wrote:
Forums are so binary... it's not an either/or.

....

It's not one or the other, both are reasons for the upswing.

I think you'll struggle to find too many posts on the forum where people said it was entirely one or the other. Most people are saying it's obviously a bit of both and are just discussing the various implications, conditions and proportions.

Of course it wouldn't be hard to estimate if we just looked up the report and did some maths to figure it out, it's just most people are too lazy or don't have the free time.


Automatically Appended Next Post:

 Azreal13 wrote:
But I'm not entirely sure how deep one can go on the wider socio economic implications of Brexit before you're effectively off topic.

Well let me try. I think unless the economy goes completely tits up it's probably not going to have a massive influence on GW's sales volume. I think GW, being a relatively cheap hobby, is not going to feel the effects of minor fluctuations

Lets face it; clearly the change in the attitude and business and release practice of GW has resulted in a real world benefit in increased consumer loyalty; increased sales and increased open communication between GW and the customers.

However much or little the national and global economic changes have influenced this is up for debate; and chances are without pouring over a lot of numbers we'd not get anywhere near a sane opinion on the situation and its likely so complex that opinion is the best we'd get rather than straight fact.


As a result of this chances are GW will continue to act along these lines; its producing a marked increase in revenue for them and even if that's partly a false reading its still a gain and going to encourage them to continue to behave as they are starting too.

For us gamers this is a great thing; it means a company paying more attention to us; it means changes in release patterns for the better of the game; it means continued model support and new releases.

Yes 8th isn't perfect; but this is their first go at it. Plus we've not yet seen it finished with all codex released. Then again when 9th edition comes we''ll have another chance to see how they handle that. By that point new codex releases would make sense after all the FAQ and Errata updates plus new releases over the years. We could even see a time when GW doesn't wholesale change all of the core game between editions. 9th might build upon 8th much stronger.


Automatically Appended Next Post:

AllSeeingSkink wrote:
. I think GW, being a relatively cheap hobby, is not going to feel the effects of minor fluctuations

I've often heard it said that hobbies actually do well (comparatively speaking) during times of economic downturn as people seek more escapism. Warhammer likely easily fits into that bracket of being affordable (yes GW might not be the cheapest wargame, but its certanily cheaper than a lot of other hobbies)