Games Workshop Share Discussion Threads

[nod] 16/1/2019 00:00

If you want the real GW product with 20% off go to Northwich-based Goblin Gaming. They have a gaming centre in Northwich and a very popular online site. They sell other products of the same ilk.https://www.goblingaming.co.uk/

[nod] 15/1/2019 23:54

With Amazon there is a very high chance any item is counterfeit. While the USA preaches to China about IP rights, one of the USAs largest companies is built on selling cheap counterfeits. And many US investors own Alibaba, again a company built on selling Chinese counterfeits.

[ccraig69] 15/1/2019 18:27

The problem with Amazon is you don't know if the item is genuine. People buy electronics from Amazon sellers all the time. My house and my family's lives are worth more than the few pounds saved

[cockerhoop] 15/1/2019 15:40

Typo56,

Just to give you a flavour of the broker forecasts at this stage & actual outcomes for the past 2 years.

2017 57.9p Actual 94.5p
2018 161.1p Actual 180.0p
2019 173p

As I said in an earlier comment 200p more likely than 173p imo so PE 15-16 & EPS growing with 40 years of IP thrown in for free!

If someone wanted to reproduce that content - 40 years of an evolving universe how much do you think it would cost? The Marvel & DC franchises might be a good place to start.

[cockerhoop] 15/1/2019 15:26

Woozle1,

It could be a variety of things, sales mix, distribution costs (warehousing has been an issue), inefficient manufacturing as capacity has been doubled. Kevin declined to show us around the site at the agm suggesting things were sub-optimal due to the pace of change and how busy they were.

It should be noted that in H2 last year gross margin reduced to 70% from 72% in H1.

I don't see any reason (Hard Brexit aside) as to why they won't match H1 in the 2nd half to give £250m revenue £80-82m PTP mand 200p EPS. The comparables are arguably easier in H2. That would be my midpoint for forecasts at this stage.

[chris_engel] 15/1/2019 15:24

Interesting point with the online distribution. Why would anyone buy directly from the GW website as you get it at Amazon for a 15% discount?

I believe this is the same product:





On the other hand, there must have been a fair amount of pre-orders for the W40k release last year. It was announced on April 22, pre-orders for June 3 and release date of June 17, 2017. So I could imagine that a lot of people would have ordered new items online at the time which would have made comparables quite hard to beat. And Online did increase over 70% from H1/17 to H1/18.

[cockerhoop] 15/1/2019 15:07

Martin,

I believe so especially with December sales running ahead of last year.

Jolomo,

It's like any wholesale distribution deal, independents are able to buy product at a discount to RRP and then chose chose their selling price. I'm not sure larger operators get a better deal. Knowing GAW I'd expect the terms to be tightly controlled.

It's a balancing act that maybe has started to swing in favour of larger online operators that have developed efficient systems rather than the previous Indy retailer selling from conventional stores although I understand you have to have a physical stores to be supplied by GAW - ie no pure online retailers.

[typo56] 15/1/2019 14:55

EPS of 200p sounds a bit high. On the revised PH forecast of £70m pretax profit I was guessing an EPS of about 173p. Depends how much tax you budget for I suppose. I'm basing on near 20% tax.

Basic EPS last year was 184.3p (restated).

So a PER of 18.5 with no EPS growth?

[woozle1] 15/1/2019 14:44

That is EPS of 200p. I think they'll do 220p for the full year. I'm still curious at the 4-5% drop in Gross Margin, which must mean that they're either discounting (which they don't do) or running some fixed costs at high levels.
w1

[jolomo] 15/1/2019 14:25

Hi Pat. Do the Trade sellers effectively get a bulk discount to allow them to sell online cheaper than GAW? Scott

[cockerhoop] 15/1/2019 14:11

In a note to clients, analysts at City broker Peel Hunt upgraded their pre-tax profit forecasts by 3% to £70mln for the 2019 fiscal year on the back of what they said was a continued positive trend in sales over December.

The broker also said that the operating profit increase was “a great result” given a “very tough” comparative from the first half of the previous year, when the launch of a new edition of Warhammer 40k had boosted sales.

Peel Hunt has a ‘Buy’ rating on Games Workshop with a price target of 3,500p.

[shanklin] 15/1/2019 13:56

No problem Jolomo. How do you know the £70m is an increase please?

[jolomo] 15/1/2019 13:52

Sorry not seen an eps forecast as yet.

[shanklin] 15/1/2019 13:12

Jolomo, What does that mean for EPS please?

[woozle1] 15/1/2019 12:02

Anyone any ideas why the gross margin is down 4-5%?
w1

[jolomo] 15/1/2019 11:41

PH have raised PBT forecast to £70m.

[jolomo] 15/1/2019 11:39

I too am struggling with the rationale re 3rd party online sales. Are they knowingly undercutting themselves? Why invest in own online site them?

[nod] 15/1/2019 11:37

Simso, I see what you mean. Although inventory was only 11% higher than June 2018 and you might expect stock to be much higher ahead of December shopping.I suppose the goal is to have warehouses operating like Amazon.

[shanklin] 15/1/2019 11:21

It is quite difficult to understand GAW facilitating the cannibalisation of their online sales in this manner. It may be a necessary evil but it would be good to understand why.

[cockerhoop] 15/1/2019 11:15

Some of them aren't small Nod, I'm aware of an independant online store that'll sell up to 200 copies of a new release game (RRP £100 but sold for £80) in the opening week compared to perhaps 10-15 in a small GAW store.

[simso] 15/1/2019 11:14

Hi Nod, in post 3108 you said "There was a comment about stock levels not being where we would like them to be. I take that to mean stock shortages, which would suggest demand has been outstripping supply. Once the new factory capacity is up to speed then this should be fixed.

I must admit I read that the other way. Balance Sheet Stock closed at £22.4m which was +37% higher than LY...which is a large increase relative to the sales increase of +14%. I saw their comment about stock levels being an acnowledgment they look "too high" rather than too low. However, I really like the explanation for the stock increase being "inventory increased by £7.5 million due to the timing of product launches and to meet sales demand". The Peel FY Forecast sales of £235m only requires £111m in H2...in line with H2 last year. The higher Inventory level and explanatory comment about product launches & sales demand implies they must be expecting something much better that level YoY sales growth as Peel forecast implies.

[nod] 15/1/2019 10:42

Goblin Gaming and other small retailers are selling bestsellers online at 20% less than GW.

[robinnicolson] 15/1/2019 10:32

Zoe Mills of GlobalData said that Games Workshop is entering 2019 in a strong position.

"While online communities can nurture the Warhammer hobby, with eventing a key component of this, the weaker online performance highlights the importance of its stores and staff. Passionate and knowledgeable staff continue to inspire and inform its customers.
Games Workshop must continue to push its presence on social media and online communities to encourage more of its customers to shop through the online channel and fulfilment to store can be an ideal method to continue to utilise its staff expertise."

[nod] 15/1/2019 10:26

For at least 12 years now, GAW has been focused on strong international growth. This needed more outlets, manufacturing capacity and improved business systems. The GFC had us bunkering down for a few years, but we've seen the strong growth coming through in recent years. Barring a global downturn we should see continued strong growth as the extra manufacturing capacity becomes available.