Topic: Latest financial figures

[Donnachaidh]

Just got these through...

GW shares have fallen 75p or 22.13% in one day!
 
LONDON (Thomson Financial) - Games Workshop Group PLC warned that its
profits are unlikely to meet market market expectations for the year to end-May
2007 due to a drop in European sales and added that it will intensify its
cost-reduction programme in the next six months.
    The fantasy figurines group said it has decided to close 35 loss-making
stores and will axe over 10 pct of its full time employees in moves expected to
generate annualised savings of 7 mln stg.
    It has decided to reorganise its warehousing and manufacturing activities
and centralise its sales support and back office operations, the company said in
a trading update.
    The estimated cost of the programme is about 6 mln stg, which will be taken
as an exceptional charge in the current financial year, it added.
    Games Workshop also said it does not intend to pay a final dividend for the
current year in order to retain funding flexibility and to avoid placing
excessive short term strain on its finances.
    The company said it has continued to make sales progress in its more
established UK and Australian markets, but that sales have declined in Europe,
especially in Germany and France. It added that management changes have recently
been made in this area.
    It said it will continue to invest in opening new stores in growth areas and
in other long term capital projects.
    'The measures set out above are designed to address short term issues.
The board remains confident in the long term future of the business and
continues to focus on growing the Games Workshop Hobby throughout the
world,' the company said.
 
LONDON (Thomson Financial) - Shares in Games Workshop Group PLC were sharply
lower in morning deals after the group issued a profit warning, prompting both
Panmure Gordon and Bridgewell Securities to downgrade the stock, dealers said.
    At 9.13 am shares in Games Workshop were 101-1/2 pence lower at 226, as the
FTSE Small Cap index fell 3.7 points to 4,094.3.
    Games Workshop said its profits are unlikely to meet market expectations for
the year to end-May 2007 due to a drop in European sales, and added that it will
intensify its cost-reduction programme in the next six months.
    The fantasy figurines group said it has decided to close 35 loss-making
stores and will axe over 10 pct of its full time employees in moves expected to
generate annualised savings of 7 mln stg.
    In response to the warning, Panmure Gordon downgraded the shares to 'sell'
from 'hold' with a target price of 150 pence, adding that sales continue to be
below expectations.
    Panmure notes that the company is responding with a series of cost savings
and restructuring, which will be funded through the axing of the final dividend.
    It also lowered its profit forecasts for the current year to 1 mln stg from
3 mln stg and for next year to 3 mln stg from 5 mln stg.
    The reality is until sales start improving it remains a stock to avoid, said
Panmure.
    Bridgewell, meanwhile, shifted its stance on the stock to 'underweight' from
'neutral' and slashed its full-year pretax profits forecast by 62 pct to 1.2 mln
stg.
    For 2008, the broker is cutting its profit prediction by around 19 pct to
4.2 mln.
    The full effect of cost savings will be felt in FY 2009, when pretax
estimates may actually tick up, Bridgewell concluded.
tf.TFN-Europe_newsdesk@thomson.com
 
LONDON (Thomson Financial) - Games Workshop came under pressure, plunging
132-1/2 pence, or 40.46 pct, to 195 after the company warned full-year profits
are unlikely to meet market expectations, and that it will omit the final
dividend.
    The group continued to make sales progress in its more established markets
(UK and Australia), with further evidence of promising developments in the US
business. However, in Continental Europe it continued to see sales declines,
particularly in Germany and France.
    In response to the warning, Bridgewell Securities shifted its stance on the
stock to 'underweight' from 'neutral' and slashed its full-year pretax profits
forecast by 62 pct to 1.2 mln stg. For 2008, the broker is cutting its profit
prediction by around 19 pct to 4.2 mln.
   The full effect of cost savings will be felt in FY 2009, where pretax
estimates may actually tick up, Bridgewell concluded.
tf.TFN-Europe_newsdesk@thomson.com
fjb/vjt
 
LONDON (Dow Jones)--Games Workshop Group said in a trading update Thursday that its overall sales performance, particularly over the recent trading period, has not been as strong as expected and therefore profits are unlikely to meet market expectations for the year to May 2007.
  The company said it has continued to make sales progress in its more established markets (U.K. and Australia), with further evidence of promising developments in its U.S. business.
  However, in Continental Europe it has continued to see sales declines, particularly in Germany and France. Management changes have recently been made in this area.
  In view of the Group's current trading performance the Board has decided to accelerate and intensify its programme of cost reduction in the business.
  During the next six months this programme will include: The closure of 35 loss-making stores; The reorganisation of warehousing and manufacturing activities; The centralisation of various sales support and back office activities.
  The company said it expects this programme to result in a reduction of full time headcount of over 10% and to generate annualised cost savings of some GBP7 million.
  These changes will focus on the removal of administrative and back office activities from its sales businesses, leaving them better equipped to concentrate on and deliver sales growth.
  The estimated cost of this programme is GBP6 million, which will be taken as an exceptional charge in the current financial year.
  In addition to this short term revenue investment of GBP6 million to restore and strengthen the future profitability of the business, Games Workshop will continue to invest in opening new stores in growth areas and in other long term capital projects in the normal course of business.
  This reflects the Board's continued confidence in the long term growth credentials of the business.
  In order to retain funding flexibility and to avoid placing excessive short term strain on the Group's finances, the Board does not intend recommending the payment of a final dividend for the current year.
  The company said the measures set out above are designed to address short term issues. The Board remains confident in the long term future of the business and continues to focus on growing the Games Workshop Hobby throughout the world.
 
  (END) Dow Jones Newswires
 
 
LONDON (Thomson Financial) - Games Workshop Group PLC said its profits are
unlikely to meet market market expectations for the year to end-May 2007 due to
a drop in European sales and added that it will intensify its cost-reduction
programme in the next six months.
    The fantasy figurines group said it has decided to close 35 loss-making
stores and will axe over 10 pct of its full time employees in moves expected to
generate annualised savings of 7 mln stg.
    It has decided to reorganise its warehousing and manufacturing activities
and centralise its sales support and back office operations, the company said in
a trading update.
    The estimated cost of the programme is about 6 mln stg, which will be taken
as an exceptional charge in the current financial year, it added.

[Veldemere]

Doesn't make good reading, for all the light hearted bashing that goes on they are generally not a million miles off the mark. Whilst the figures on the share price alone make for bleak reading I think GW are looking towards the future to re-establish their sales base and cope with the ever changing retail environment. There is little room in the high street for such a 'niche' shop but their problems are not greatly different form those of other 'niche' traders. I presume a large portion of the share fall is tied to the cessation of dividends.

[Shadowlord]

And to be honest,  lot of companies are suffering because of the "Asian Boom" not just GW.

Saving is natural. 

[Phydox]

Bleak indeed.  and while Gws down...<kick>.  Seriously though, all the grumbling and griping I do about GW isn't because I wanna see them fail so I can point and say "Nanner nanner, told you so!".  After experiencing wave after wave of price increases, well above inflation, I have begun to feel lately, that the company places profits and shareholders above customer satisfaction on their list of priorities.  Rather then show an effort to appear interested in knowing what consumers want, GW keeps taking steps to further isolate/insulate themselves from us:  Close down GW forum, stop outside play testing, the list goes on, just look at Grutch's "Flawed Design" thread for more examples.

I can only base what I now say on personal experience and over the past two years, my wages haven't kept up with the real CPI (that includes fuel and healthcare costs)  So, the majority of disposable income I had two years ago is now going into heating my home and fueling my automobile.

New people are not entering the hobby around this area because its too expensive.  GW has basically priced themselves almost out of existence.

[Captain Tineal]

Don't forget, younger buyers are going to say... do I want 20 Empire soldiers (roughly $70 Cdn) or do I want a new video game?

Most are going to go for the video game.

They're directly competing with video games for a good chunk of their sales, so they're going to have to make their product more appealing by increasing the value of their product to their target consumer.

[Rufas the Eccentric]

After all I have done to help them? 

I think they are being hit by two forces.  1:  The constant price rises are taking a toll.  Any time a company tries to fight Adam Smith, Adam Smith will win.  2:  At least in this area (Maryland/Washington DC) their stores are, for the most part, in large shopping malls.  This means they are paying premium rent for foot traffic, when 99.9 percent of that foot traffic could care less about the product they are selling.

Will they learn there lesson?  Time will tell.

I think I hear the faint sound of Gargoyle chortling from across the pond.

[Gneisenau]

The big pond, isn't it?

But I'm with Rufas here, on both points. The "official" stores are probably the major problem - way too expensive. That, and forgetting the principle of offer and demand. Dear old Adam is just almost always right.

I just hope they recover.

On the other hand, it would be interesting to see what would happen if they got acquired by some Private Equity Fund... no, only joking.

[Siamtiger]

After all I have done to help them? 

I think they are being hit by two forces.  1:  The constant price rises are taking a toll.  Any time a company tries to fight Adam Smith, Adam Smith will win. 

That can't be true, he isn't Chuck Norris

I´m not that into the Markets, what does this price fall mean in "normal terms"?

[Rufas the Eccentric]

Well, the second biggest pond.  The one that separates me from Warlord is bigger after all.

JK Rowling will buy them with her pocket change.  I am surprised Gargoyle has not chimed in.  They're locking him out fairly consistently on the Brewery.

Edit Siamtigger:  About three years ago it it was trading in the 700/800 pence range.  When the Lord of the Rings buble burst, it dropped down to the 350 pence range where it has hovered for some time.  Its now lost at least a third or more of that value and seems to be droping further.  Ultimately, this is the value that investors are putting on the company.  It is worth only a quarter of what they thought it was worth 3 years ago.  Not good.

[Mystic Force]

I have to say its getting kind of silly how much they are asking for the product.  I bought metal wizards this week, because I know when the new plastic set comes out they are going to be more expensive.  Retailers dont like dealing with them, its expensive and I dont think those kids they rely on will come into the hobby if the barrier is to high.  Reducing overhead will help save money but it seems that its the revenue side that is suffering most.  Up till now I have been reluctant to go to e-bay, because you dont know exactly what state its going to be in, but now Its starting to look better.

What else can I do with my money analysis

$44 for 20 empire soldiers

1 Tank of gas (430 miles of driving)
42 imported beers
1 1/2 computer games
1/5 of months Electric + Gas
1/4 Car payment
3 days food for a family of 5

There are lots of demands on my money and GW is getting further down that pecking order

[sdermont]

I have to agree that my main issue with GW is price. I have been buying their stuff since around 1990, and I've always thought their stuff was kind of pricy. But I thought it was worth it because I really liked it. But now, I think they have gone too far. I still like their stuff, but I think it has been priced out of my range. It is getting very hard for me to justify paying $45 for those 20 empire infantry. It doesn't seem that long ago that I was cursing when they were raising the cost of their boxes to $30 for 19 figures. Now it is just gotten ridiculous. Other than the cost of gasoline and heating fuel, I have not seen price raises like this for any other kind of product that I have purchased.

But what is the solution? I wonder if they have gotten themselves into a bind with their current model of selling product. The idea of having dedicated store fronts for their merchandise just seems like a huge killer to me. The overhead cost for maintaining all of those stores must be killing them. I personally can't think of any other kind of hobby where a manufacturer can manage their own store fronts other than maybe a flagship store.

I've never understood why they couldn't operate through normal supply chains through local hobby shops and game stores. Of course, now that would mean that they would have to mend an awful lot of bridges that they've burned with all those hobby stores that they've upset out there. They have never had the best relationship with those guys... But a new attidude, and lower prices could maybe go a long way towards winning back customers and store owners.

It just all too bad. I hate to see my favorite gaming company of all time going belly up because the are too arrogant or ignorant to make wise business decisions.

Scott

[reiksmarshall]

Franchise! I've been saying it for years. GW allows an indie to buy a GW name for its stoe front, on condition that it sells X amount of its product (probably no warmachine or any major stuff, but possibly CCGs, etc), and adheres to loose company policy (so no alcohol, drugs, swearing, human trafficing, etc, which could hurt their name). That way GW are getting money for having stores, profit from selling their models, and losing most of their overheads. Kerching!

Of course, if GW just pulls out willy nilly and randomly, a huge vacuum will develop that will destroy the world. They need a slow withdrawal policy that won't destabilise the hobby. So mend those bridges, create a good selling relationship, and listen to those that actually make a profit and know their consumers - the indies!

[Wyzer1]

Eh, unfortunately all my GW playing friends are pretty much gone... 

Some stopped playing Wargames altogether, 1 went in the army, some moved to never-never-land, and the majority went to Warmachine. My local (well, its a half-hour drive) store only plays War Machine, little 40k and some Infinity now

On the one hand I can keep my arm and leg and on the other hand I rather enjoy playing Warhammer. These figures make Warhammer look even grimmer

[Rufas the Eccentric]

Sorry to hear its hard to find players,  Are there any other stores/clubs nearby?  It's always fun to play old friends, but I've made a few new friends just through playing.

Official closeing price was 260 P or down slightly over 20%.  Its not the end of the world.... yet.  Scrolling back over the last ywo years there have been similar drops and the price bounced back.  However, it was trading at the 850 P range as late as April 2005.

MAybe we could get everyone on all of the bords to scounge our pocket change and beer money and buy them out.  Yeah, I know it won't work, but it's cool to think of the company being  run like a co-op.

[Warlord]

Well, the second biggest pond.  The one that separates me from Warlord is bigger after all.

Thank goodness    Yes, it is a very big pond. It has nice tropical islands in the middle though, can't think of many between you guys...

This news continues to make me worried about GW. I really want them to succeed, and I hope this share price drop means they make more changes to their approach than just the restructures mentioned. I really hope this pushes them into gear.
However I am glad to hear that UK and AUS markets are still strong. I still have a future (I hope). I'm guessing they are going down in Europe because of excellent manufacturers such as Gamezone competing with them? They should operate in a centralised fashion anyway, decentralisation often leads to redundancy in production / staff. And the franchisee idea sounds like an excellent one, I am just unsure of many willing to purchase a store like this (who aren't already operating an indie).

[Shotzie]

The 1st Lead figures I bought were for 10 cents each, of course it was 1974, a few years before GW started.  But I am always amazed at the GW prices lately, Reaper is so much cheaper, equal or better quality, and a larger selection of figures.

It has to be hard on GW, competing against computer games.  Out of 3 teenage boys, 1 plays warhammer and D&D, one plays D&D, and the 3rd only likes to paint the figures, but all 3 play hour after hour of WOW.  I think table top games are going the way of 8-tracks.

Shotzie

[Gargoyle]

How are they going to get out of this situation though?
Thats what concerns me.
The 6 million required to downsize may be more than their turnover for this year.

GW execs are talking about growth in the UK but that is not what I'm hearing from the managers I know in the UK.
Ten of the twelve regional sectors are failing to make as much as they did last year and the other two are struggling to break even.

The price has just gone up again recently, there is no sign of it going down anytime soon, they are not making themselves any more attractive to the customers or the internet market place.

No end of financial year dividend means there is going to be serious ructions from the corporate shareholders.

As an astute member cleverly raised, WFB and 40K the two long term core games have been dropping in sales steadily since 2000, this was covered by a smokescreen of massive LotR income so now in the middle of 2007 those two core games are still losing sales every year and LotR is something of a dead duck on the sales front.
They have done nothing to improve sales of their two longstanding core games for 7 years.
Where is their income going to come from?

The GW retail footprint is pre-Internet.
Their competitors are post Internet footprint companies.
Are GW going to be able to revoultionise how they conduct themselves?
All I am hearing is they are telling their staff to buckle up their belts for a rough ride in the short term and one in 9 staff are going to disappear.

We know they are going to get smaller but how are they going to make money?
Continental Europe has died a death and the UK is feeling the squeeze now as well. I know four shops in London that are not making money and another two that are on the breadline.
I'll be very interested to see the shareholders report in a months time to see exactly where the growth in UK is they are talking about.
Their current format is not working, they need 'new games' and 'new' strategies.

The older gamer market is still walking away from them and their release schedule is in slow motion compared to their competitors.
Where is the summer army for WFB?
Some buildings and the odds and sods that were missed out on the previous three releases are what makes up the summertime release.
It's very weak.
They need a stronger product.
They need to bring out 'new armies' that have not been done before like OK's, they should have explored the east after OK's, that way there is no generic GW models from a previous edition that can flood the 2nd hand market on eBay. So they don't lose a large amount of profit that way.

The discount they offer to Independents is too small, their product isn't moving well, it isn't moving at all in continental Europe.  Why would Independents want to stock their expensive product at a risk of it not moving when they can stock other products that are moving that provide a better discount and therefore greater margins?

They've been sacking staff for two years now (40% across the board in the UK alone) and the product has not improved in the eyes of the customers, the game systems have not improved in sales, the release schedule is still too slow.
Closing thirty five stores in poor pedestrian traffic locations is a good idea.
Wholesale redundancies are a necessity.
GW dropped the ball with LotR, they saw the pots of money coming in and forgot to keep improving their core product and refining their market approach.
When the films stopped the bubble didn't burst so much as it exploded and fall out is still going on to this recent catastrophe... and will continue to at least until the shareholders report in a months time.
What the corporate share owners do then is the critical issue.
Kirby and his mates (Alan Stewart) on the board have been lining their pockets to the detriment of the company over the last 2 and a bit years.

Where are the improvements that can take them forward again?
Where are the strategies that can make them attractive to the customers and the Independent game stores?
Where are the games that can reignite their sales numbers?

[BAWTRM]

I find it telling that apparently GW thinks that it's decreasing market share in Germany and France can be remedied by 'management changes'.

[Shadowlord]

I'm guessing they are going down in Europe because of excellent manufacturers such as Gamezone competing with them?

I wish that was the case (then it could be easily reversed). 

You could take ALL other wargaming companies in the world, add all their accumulated gross, and they wouldn't even reach 50% of what GW is making. Rackham, which so many praise for some reason as the new GW, with all their "big games" gross less than 3% of GW (read both companies financial reports). So why are these not being slowly strangled to death? Because they have less expenses and less demands, and are a puny company in comparsion. The effects of a hobby reverting will not affect them much, if at all. In fact they will steal some customers and loose very little, but in no way could they even begin to compete with the mamoth that is GW.

You have one enemy here, unless you count Tom Kirby, then you have two, and that is the Video game market.

Pure and simple.

If GW wants to stay where they are or at least strengthen their name, they need to cut costs severely and create much more enticing first buy products. Skull Pass, Moria, and McCragge aren't enough. Nor is the price hikes, which I do not mind since I do not find this to be an expensive hobby, for those who has stuck with the game for long doing them any good.

But seeing how WotC pulled the plug on Dungeon and Dragon magazines, I suspect the RPG and Wargaming markets are going downhill pretty fast.

http://paizo.com/dragon

[Dain of the Border Legion]

Bring back Man 'O' War, that can save them! They already have the moulds, it goes for mega money on ebay so that shows demand is there! BRING IT BACK GW!

If I can see it, how come GW can't?

Muppets...

Dain.

[Shadowlord]

Bring back Man 'O' War, that can save them! They already have the moulds, it goes for mega money on ebay so that shows demand is there! BRING IT BACK GW!

If I can see it, how come GW can't?

Muppets...

Dain.

Um... They probably are reviving that game.

From the latest Watchman it is very likely they will remake this game and pull it together with Mighty Empires.

[Hendrid]

GW products have been getting dearer and dearer and their blatant ripping off of their customer base in the 5 year turn-a-round of rules re-release and targetting a mid-teenager market, coupled with their getting rid of any semblance of product support and their laughable 'it all in the hobby' pseudo mentallity is obviously not working.

Huge over-heads, share holders to keep happy and a far greater level of quality competition from figure manufacturers (from all over the world) coupled with a (in gaming terms) pretty flawed game system does not sound like something I would invest in.

Along with a couple of comments below, I would say that the number of people I know that play WHFB is next to zero, the games at my local club are AoA or Warmachine, void etc. It's only the occaisonal game of LOTR or WH that gets played and then thats because of the huge investment people have made in the past and want to use what they have already bought. The likely hood of buying the new stuff is minimal, just wait a couple of months and you can pick up what you want on ebay.

Don't get me wrong, GW have been going for the best part of thirty years and I would like to see them continue and indeed to go from strength to strength. They have brought a lot the hobby over the years but a bigger input from 'gaming' and less from accounts would make a big difference.

Maybe market forces will make the difference and the possiblity of them going down the plug hole might make the difference and make them see reason. Other companies can survive and service the gaming community using mail order and local gaming shops, GW maybe should do the same.

[jlutin]

Customer Service and high prices are killing them.

Recently I bitz ordered the pieces for a War Alter (the one from a war wagon), when the order came in the top platform wasn't in the order.  When the owner called, there was no reason for it and they said it would have to be reordered.  That's 40ish bucks wasted till there is enough demand for another bitz order.

That happens all the time.

The price for figs is beyond belief.  No excuse.  65 bucks for a steam tank?  No way.

[Gneisenau]

It has been my impression that they'd dismissed the idea of independent game stores by striving for a complete coverage with GW-stores, looking for "vertical integration" - that is, controlling the whole business from production to retail. But for this concept to work, the demand for wargaming has to be sufficiently high on its own, which isn't the case (at least in Europe). The presence in the independent stores has been the best advertisement there is, because people who go there were looking for games. People who are ambling through a megastore are just looking for something to buy, and they'll rather go for easy products rather than highly specialised ones.

The very idea of opening GW-stores in nearly every city was risky at least to begin with. What do you get in these stores? Every model there is. Fine, but I can have that from local gaming stores and via the internet (now the LGS are closing due to the competition, which means even less sales). Some advertisement ("Look, mummy! Billy wants a giant!") - but for the advertisement, they pay with staff costs and, most of all, rents (which are nothing less than exorbitant in some places). The money would have been so much better spent on marketing campaigns, if they really wanted the advertisement.

Where are the improvements that can take them forward again?
Where are the strategies that can make them attractive to the customers and the Independent game stores?
Where are the games that can reignite their sales numbers?

1. Spend less money. Make products that are less crying for attention, but perfect handiwork. Quality is compulsory if you want to stay at the top.
2. There's a big problem - some independents have already turned away. Closing many stores will be an option.
3. The games are there, in my opinion. What they need is a better awareness of them. One option could be publishing better fiction. LotR was successfull for a time because the movies boosted the sales. Get some people who can write good books, books which interest a market beyond wargamers, and you have the best advertisement there is. The background of both WHFB and, to a lesser extent, 40k, is rich enough to provide the underlying structure.

[Gargoyle]

3. The games are there, in my opinion.

Well as far as the two longstanding core games are concerned the market disagrees with you.
WFB and 40K have been dropping in sales every year since 2000, the LotR bubble masked those figures.
If you are referring to the specialist games then you may well be right.

GW are a pre-Internet retail footprint, they have been undone by several of their own errors and the emergence of new Internet friendly TTMG companies who are working smarter.