GW 2014-2015 Half Year Results

[Erik Setzer]

Blast, can't see it at work. (If anyone could be a dear and download it and put it somewhere "safe," that'd be great.) Ironically, the filter here blocks GW's investor website, but not their core website. Sometimes I wonder who's setting the rules for that thing...

Anyway, on topic...

It's not just the 40K rulebook, which was $85 so a hefty sum of money per purchase. Is this for the second half of the year, or first half? If second half, it should catch even more of the 40K rulebook sales, plus the two campaigns, all that End Times stuff, Orks, Space Wolves, Grey Knights, Dark Eldar... Holy smokes, if you're down on sales despite all that stuff coming out, there's a problem. But even for the beginning of the year, you have the IG, Tempestus, Knights (which should have continued to sell as the year went on), Escalation and Stronghold Assault likely (I think they were late 2013 releases so might have moved more in early 2014), Dwarfs, Tyranids, probably more stuff I'm forgetting.

For the entire year, they swapped out the underperforming (gee, I wonder why?) $10 monthly White Dwarf with a $12 monthly Warhammer Visions and $4 weekly White Dwarf, so if people got all of those, that's $28/month at least. Of course, given the number of copies I see ending up in the trash (where they toss them, instead of trying to re-sell them), it seems they're not moving as well as expected, so the whole restructuring of WD to try to get more money for less work doesn't seem to have worked so well. Wow. Who could have seen that coming?

[Erik Setzer]

So here's a funny line I read in an article about this:

"The group said growth in its UK retail division was offset by declines in North America and Europe."

So yeah, that whole excuse of UK retail being down and that affecting GW? Nope. Doesn't fly. GW did fine in the UK.

I suspect it's because their new business model is meant to drive people straight to them, which works in the UK with all those stores around, but in the US, where people like their independent retailers, they're pissing off a lot of people with lack of availability and a lot of the stuff they're doing (i.e. weekly WD).

I also find it a bit concerning - and would be more so if I was actually an investor - that yet again, you have a CEO of GW trying to spin a drop in sales as "growth."

[40kGamer]

No big surprises. If you do a comparison of the first half to second half history over the last 5+ years the second half averages about 4.3% higher for revenue and 5.4% higher for profit. So an expected trend line would put the year at 115.4mil revenue and 12.7mil profit. If that proves to be true there's no reason for them to not simply stay the course.

[Wolfshade]

So here's a funny line I read in an article about this:

"The group said growth in its UK retail division was offset by declines in North America and Europe."

So yeah, that whole excuse of UK retail being down and that affecting GW? Nope. Doesn't fly. GW did fine in the UK.

I suspect it's because their new business model is meant to drive people straight to them, which works in the UK with all those stores around, but in the US, where people like their independent retailers, they're pissing off a lot of people with lack of availability and a lot of the stuff they're doing (i.e. weekly WD).

I also find it a bit concerning - and would be more so if I was actually an investor - that yet again, you have a CEO of GW trying to spin a drop in sales as "growth."

This is an issue that I have debated on the forum before, essentially, I don't think that the UK model isn't a good fit for the world as an whole, in Japan and parts of Europe (and a few places in North America) it could work. It works well where you have fairly high population densities so single stores can be found in city centres and aren't too far to travel and have a large catchment populations.
I would be leveraging this FLGS, that have a dedicated community, and get them to bear the cost of a the store (and associated costs) rather than trying to go into competition with them, but then what do I know I have 0 experiance running a model store..

[Charon]

This is an issue that I have debated on the forum before, essentially, I don't think that the UK model isn't a good fit for the world as an whole, in Japan and parts of Europe (and a few places in North America) it could work. It works well where you have fairly high population densities so single stores can be found in city centres and aren't too far to travel and have a large catchment populations.
I would be leveraging this FLGS, that have a dedicated community, and get them to bear the cost of a the store (and associated costs) rather than trying to go into competition with them, but then what do I know I have 0 experiance running a model store..

Not quite sure how this works out when you have a FLGS nearly next door that sells your products 15% cheaper grants you a bonus and sometimes has extra sales for another 10 - 15% while maintaining a hobby center with multiple tables nearby while the GW store sits on one small table that is for demo games only and hardly enough room to squeeze through between the table and the products.

[Path Walker]

Not quite sure how this works out when you have a FLGS nearly next door that sells your products 15% cheaper grants you a bonus and sometimes has extra sales for another 10 - 15% while maintaining a hobby center with multiple tables nearby while the GW store sits on one small table that is for demo games only and hardly enough room to squeeze through between the table and the products.

The main demographic for GW is children and their parents, the sort of person put off my the cliquey nature, and the smell, of FLGSs

[Defenestratus]

Not quite sure how this works out when you have a FLGS nearly next door that sells your products 15% cheaper grants you a bonus and sometimes has extra sales for another 10 - 15% while maintaining a hobby center with multiple tables nearby while the GW store sits on one small table that is for demo games only and hardly enough room to squeeze through between the table and the products.

I agree - the whole "location" argument doesn't hold water for me honestly. Certainly location is a factor but not the primary reason - after all we Americans drive everywhere. More important than location is "is there ample parking?" Its more of the facilities offered and the community that is fostered (in addition to the usual discount in prices) that make the NA LGS the most popular option.

When I moved to Georgia in 2006, I found out that there was a GW store in the Mall of Georgia, about 15 minutes down the highway from me. Perfectly located. It had three tables and it had a small painting station. The manager had fostered a decent community and we had a great time playing there for two years. Then corporate came down and told him that the store was going to close in three months, and so he and his redshirts went literally to the other side of the road from the mall, opened an LGS in an old Dupont Paints store (massive square footage) with a huge hobby area, small retail area and 12 quality, heavy duty tables that had casters on them so they could be linked together.

GW decided to keep the store open, but it didn't last. It closed 1 year later because nobody went there and the lease was up. The replacement GW store manager would come to the LGS... to play 40k since he said there was nobody at the GW store to play with.

GW Stores just don't offer what the LGS stores here offer. Socializing/Hobby areas, space to play without having to cramp into an uncomfortable space, and prices that are actually tolerable. The retail stores might be good for getting 10 year old kids to get their parents to buy them a boxed set, but not for fostering a wargaming community that leads to revolving sales.

[Eldar_Atog]

Not quite sure how this works out when you have a FLGS nearly next door that sells your products 15% cheaper grants you a bonus and sometimes has extra sales for another 10 - 15% while maintaining a hobby center with multiple tables nearby while the GW store sits on one small table that is for demo games only and hardly enough room to squeeze through between the table and the products.

For me, it usually resulted in GW being crappy to the FLGS owner till he/her bans GW product from being used in their store. At that point, interest in the hobby tanks because of no play space besides people's homes. For most of the time I have played 40K, finding a play space was always the biggest hurdle.

The only reason FLGS in the states stock GW at all is because it has a large following. The profit margin is around 12% for the store owner while being a huge space hog. On the other hand, CCG's take much less shelf space and have about a 30% profit margin.. perhaps more if the owner keeps up with the market for card singles. (These figures come from store owners. I'm taking their word for it)

[Renegade]

It all seems fairly positive and legit, apart from the line blaming stores for falling profit.

The continent has been in a malaise since 2008, falling profits from our neighbours are therefore to be expected, what is notable is the unprofitably of the US market for GW.

There is a big fall in the companies debt, what would be interesting would be to know what capital was being spent on to see such poor returns.

The complaints that the cost of the game is to high in the US is nullified by the fact that GW reports a loss in currency exchange rates, though this should be looked at more often (a lot of corporates adjust prices at least monthly to figure in fluctuations in market prices and reset exchange price). But I do not know the US market and a lot of US commentators go on about the rule set (which seems fine for the UK market, perhaps our cousins are playing the game wrong).

GW should keep doing what they are doing in the UK and take another look at the foreign market strategy, it is the latter that is letting the company down.

[Mr Mystery]

I agree - the whole "location" argument doesn't hold water for me honestly. Certainly location is a factor but not the primary reason - after all we Americans drive everywhere. More important than location is "is there ample parking?" Its more of the facilities offered and the community that is fostered (in addition to the usual discount in prices) that make the NA LGS the most popular option.

When I moved to Georgia in 2006, I found out that there was a GW store in the Mall of Georgia, about 15 minutes down the highway from me. Perfectly located. It had three tables and it had a small painting station. The manager had fostered a decent community and we had a great time playing there for two years. Then corporate came down and told him that the store was going to close in three months, and so he and his redshirts went literally to the other side of the road from the mall, opened an LGS in an old Dupont Paints store (massive square footage) with a huge hobby area, small retail area and 12 quality, heavy duty tables that had casters on them so they could be linked together.

GW decided to keep the store open, but it didn't last. It closed 1 year later because nobody went there and the lease was up. The replacement GW store manager would come to the LGS... to play 40k since he said there was nobody at the GW store to play with.

GW Stores just don't offer what the LGS stores here offer. Socializing/Hobby areas, space to play without having to cramp into an uncomfortable space, and prices that are actually tolerable. The retail stores might be good for getting 10 year old kids to get their parents to buy them a boxed set, but not for fostering a wargaming community that leads to revolving sales.

Well indeed. But, from their own breakdown, a not insignificant part of their US takings come from their relatively few stores. Main advantage being anyone getting started through a GW store is getting started in the GW Hobby, rather than the wargaming hobby (two separate entities, given GW offer everything you need).

Though I am always baffled by claims GW muscles out FLGS - as I've said before, if your local game shop, selling at a discount, and having served their community for however long can be shut down by someone else selling a single game at full retail, it's hard to say the newcomer is at fault.

But, new hand at the pump. Cynical as some might be, we may see new tricks being tried - it's too early to tell. For the moment, they remain in a decent amount of profit, and the sales slipping aren't anything that can't be turned around over a couple of years - it's simply not the outright collapse some want it to be seen as. For now, they have the luxury of being able to take their time, and not rush into things.

There was a job advertised fairly recently, which was to my mind a new role (certainly not aware of it having existed during my stints with the company, though I never rose higher than trainee manager). Seemed to be an intelligence gathering post. Was met with cynicism typical of the Dakka Hate Mob. Yet a role like that, given the lead times of GW stuff, any feedback is going to take a while to percolate through in terms of new products.