Games Workshop Share Discussion Threads

[nod] 22/1/2018 11:24

Re the RNS today"The Company was also informed that on 19 January 2018 ..."Was the word "also" a copy and paste error or was the RNS scheduled to be after something else today?

[nod] 17/1/2018 22:32

DOW and Nasdaq up over 1% Relief that Donald is not medically insane, and his insane behaviour is normal.Should deter sellers.

[nod] 17/1/2018 11:15

There doesn't seem to be much appetite for selling below 2500.This suggests that most investors are now happy to hold for the longer term and short traders fear getting caught out by the next trading update and possible dividend that attracts buyers.

[interceptor2] 16/1/2018 11:57

Thanks hawaly, I had forgotten about that.

Have now set up an alert just incase.

[nod] 16/1/2018 10:17

Trident, yes that information came as a shock.

[hawaly] 16/1/2018 09:42

Potentially relevant that last years Trading Update and Dividend announcement was issued at 1410hrs.

[trident5] 16/1/2018 08:20

Thanks Nod - they sell more stuff in the run up to Christmas - I'll make a note of that one.

[nod] 16/1/2018 07:45

Just a reminder from the recent Interims:"12. Seasonality The Group's monthly sales profile demonstrates an element of seasonality around the Christmas period which impacts sales in the month of December. "

[nod] 15/1/2018 19:52

We should get a trading update this week. We may also get another dividend. We got 30p in December but we should have plenty of spare cash after December trading.

[interceptor2] 15/1/2018 19:38

Last year GAW issued their interim results on Tuesday 10th January, 5 days later they released a positive update on trading.

Might we see a trading update tomorrow?

[cockerhoop] 15/1/2018 10:17

Woozle1,

If you look at his posts - they're all Cyrpto Currency Spam onto multiple boards. I imagine Nod has rightly moderated.

[woozle1] 15/1/2018 10:13

Wow! Never seen anyone moderated before. What did killman2 say?
w1

[zoolook] 14/1/2018 00:13

"girls" :-)

Thank you for reply

[nod] 13/1/2018 23:55

Hi zoolook,Re your questions: "In terms of the long term cycle what do you think accounted for the historical drop offs?? The company running out of steam with innovation and customer engagement? or wider consumer trends i.e. sentiment, fashion, recession etc outside the companies control?"You've touched on a few factors over the past 25 years that have impacted sales and profits. I would say the main ones have been (not in order):a) Consumer trends (especially among the essential young recruits)b) GFC and country-specific economic downturnsc) Competition: Playstation, Xbox, Warcraft, PC games, sport, girlsd) International expansione) Better relationships with trade accounts, relaxed online rules for TradeSome of GAWs long-term strategies cost them a lot of money and took many years to bear fruit. International expansion stepped up from around 2005. Tom was very focused on growing the USA market. He handed over CEO role to sales manager Mark Wells in December 2007 - an unfortunate time for Mark as the GFC went on and on ... and on. Tom relocated to Baltimore in 2010 to give the US market his full attention and fix problems. He had opened big stores in big shopping malls but many had to be shut-down during the GFC and the store format re-thought. Sales were good but costs were too high and many stores were heavily loss-making. However, the strategy massively expanded awareness of the brand in the USA.This expansion into the North America has now payed off. GAW's own US stores are growing at the average rate (strong though) while Trade (US independents) are seeing exponential sales growth. A lot of this will be online sales through the indies own web sites. Online was an area where GAW has been draconian in the past but with some relaxing of its rules online is clearly expanding the hobby to people who can't get to stores. Net profit through Trade is much less of course.The business plan is to open more one-man hobby stores across North America. I think the expansion effort and associated problems and costs (largely as a result of the GFC) had an impact for many years but we are now seeing the rewards with new customers. The stuff GAW is doing online looks excellent and makes them look a lot more professional. Warhammer TV is churning out short videos at an average rate of one a day. Many are just simple video ads but they are an excellent way for new customers to see the broad catalogue of products on offer. For hobbyists the painting tutorials are excellent. As you know, I believe there is a lot more to come in this cycle. As always, we have to watch out for those external factors that GAW doesn't control.

[zoolook] 13/1/2018 10:41

Hi Nod,

Thank you for all this. In terms of the long term cycle what do you think accounted for the historical drop offs??The company running out of steam with innovation and customer engagement? or wider consumer trends i.e. sentiment, fashion, recession etc outside the companies control?

[nod] 13/1/2018 05:06

Walbrock, I read your analysis with interest.It's been 84 degrees F today and 75% humidity, so indoors with air-con for me.Your chart with profits and market cap shows there was a disconnect following the GFC, as you mention, which probably reduced sales for a few years and also reduced investor activity keeping the share price well below levels where it would normally have gone. As a consequence, you only have one 'normal' consumer cycle on your chart. To see another normal cycle you need to look at 1994-2000.We can only speculate on the GFC impact but it is quite possibly the reason the last cycle was a little erratic and perhaps a lot lower in revenues than expected. This followed many years of significant focus on USA business development that didn't reach its potential - until now.The parameter I would throw into your equation is the customer. There is a tendency to model revenues on the basis that all customers arrive at once, not allowing for young ages and product awareness.As I've mentioned many times, young customers invest a lot of time and considerable money in the hobby. So most customers stay at it for 3 or 4 years, buying whenever they can afford and particularly at birthdays and Christmas. GBP 300 doesn't buy you much of an army. In past cycles customer numbers and spending have grown year on year, for 3 or 4 years. This can be seen in the profits each year from 2001 to 2004. The profit decline in 2005 is gradual, as customers starting the hobby in 2004 continue buying for a few years.This is because customers don't all hear about and start buying WH at the start of a new cycle. While the current uptrend may have started 18 months ago, many new customers will be starting the hobby today and many others will be starting in 12 months. A 10 year old may only become aware of WH next month but he may have to wait until his birthday to get started. GAW has indicated this new take-up in its customer connectivity stats.The suggestion that sales and profits have already peaked seems bizarre based on previous customer patterns and revenues. It would suggest everyone has bought all or most of their armies by now, with only one Christmas to do this for many players. I can't see that.This is not like buying a Rolex, where the customer makes a big one-off purchase and disappears.This is a hobby where customers invest continuously year after year, building up their collection.

[nod] 12/1/2018 20:21

The LOTR theme ran in parallel with Fantasy and 40k.
New customers could relate to LOTR and knew the characters from the books and the films. The veterans I saw during those LOTR years never bought LOTR but continued with their themes.

Some of my son's friends moved quickly from LOTR to 40k so they could participate in gaming with vets. The favourite theme being played seemed to vary from store to store. Some were 40k, some Fantasy, some LOTR.

If you have decent charting software I suggest you look at the GAW chart from 1994 to 2016. The LOTR period from 2000 to 2004 was very similar to the period from 1994-1998.

From a low around 100 (1994 and 2000) the shares peaked each time at above 800 (1998 and 2004). In 2013 the share again peaked above 800. There would likely have been a completely different cycle from 2006 had the GFC not caused world chaos. We can't use this period as a guide.

The new low was established in 2016 at 450. Maybe we will return to that level in 2020 or 2022 (based on six-year cycles). Or maybe we will establish a higher low based on our significantly bigger international presence and product awareness.

[nod] 12/1/2018 19:33

My first exposure to GW was in the 1980s. I lived overseas since 1982 and on annual return visits to the uk would visit family. My young sister has three boys with around four years between all three. On one visit in the 80s the eldest had a set of Fantasy models, which he loved to paint. Over the years my sister's house had more Fantasy models than the average GW shop. I was fascinated by these. I could relate to the hobby of assembly and painting as I had done the same thing as a boy in the 1950s and 60s with Airfix models and little soldiers. Airfix is still going after 78 years and has been revitalise by current owner Hornby which has re-issued many of the old models, still branded as Airfix.

[allstar4eva] 12/1/2018 16:07

Great posts guys. It really helps those relatively new to GAW to understand the business.

[simso] 12/1/2018 16:01

I appreciate reading Nod's wisdom on this, with 23 years of knowledge.

There are indeed a range of potential outcomes. At one extreme is the Current Broker forecast, requiring only 64p of earnings in the second half, barely much different to second half LY...and by implication treating a sizeable element (perhaps 40p+) of the 97p delivered in H1 as being "one off" / spike relating to Warhammer launch. At the other extreme, any Forecast which takes the first half 97p and extrapolates up using an average 1st/2nd half split is not recognising any element of "spike" in the 97p at all.

I suspect the true answer is somewhere between, and on reading this Board (and particularly the wisdom of Nod and his 23 year involvement)I lean more toward believing that the more of rise is sales and profit is closer to the "sustainable" rather than "spike" extreme. Two reasons: First the fact that GAW already had very strong business momentum leading into the Warhammer launch lastr Summer, for all the reasons discussed extensively on here relating to Marketing, Online development, Customer Engagement etc; the share price was recognising this by increasing around 150% between June 16 and June 17. Secondly, I hope and believe the new Warhammer, as an expensive and multi-faceted hobby, will create a steady flow of incremental sales. It would be good to compare against any previous Successful Launches, so see if they "sustained" or "spiked". I am not sure LOTR in early 2000's is a good comparative; It was a phenomenon and in the nations consciousness when the films were out, and am sure GAW benefitted from that in a more temporary way from all the surrounding publicity.

[shanklin] 12/1/2018 13:35

Nod

I mentioned Lego in the context of operational gearing and profit margins. Both companies obviously invest a great deal in IP but their marginal costs of production are minimal when compared with ther sales price.