Games Workshop Share Discussion Threads

[nod] 22/1/2019 11:43

I don't know if this photo will show here.

An anonymous poster a few days ago says his GW box shows "Manufactured in China and Distributed by Games Workshop"

[nod] 22/1/2019 09:00

CH, are you sure the China Made was not a counterfeit? It would not make sense for GAW to invest millions in U.K. manufacturing and then have some items made in China. It would defeat the purpose of manufacturing our product in Britain.

[nod] 22/1/2019 08:40

The interesting nugget in Alex Hern's good article is the hidden story behind French company Asmodee, a board game maker, which has been owned by private equity firms since 2013. In 2018 one private equity firm (Eurazeo) sold to another (PAI) for a very good profit of around four times. The new owner (PAI Partners) believes there's a lot more growth to be had in board games, card games, comics, mobile games, and potential spin-off movies. The acquisition price was around gbp 1 Billion. Which is similar to GAW's current (under)valuation. The previous PE owner (Eurazeo) grew annual revenues since 2014 from eur 125 to 442 million. An impressive 37% annual growth rate. Much of this growth was through acquisitions of rights. It's large retail network gave it the capability to generate more revenue from the acquired rights. It seems to have used its manufacturing capability in board games to produce customised products for many franchises. Board games have very high margins.From what I can make out, France-based Asmodee was a simple yet ambitious board game publisher and under Private Equity management became a much broader licensee, developer and distributor of other franchises, such as Star Wars, Pokemon and many others I've never heard of. It has grown to second to Hasbro in its space.Much as GAW did well with LOTR - which was just one licensed franchise. It makes me wonder whether private equity firms would see a similar potential in GAW to use its huge international retail network and unparalleled gaming expertise to milk other franchises. GAW no longer has a cornerstone founder or board shareholder to block an attractive acquisition. Current management stay in place because that's what PE is paying big bucks for.In the meantime .... GAW has been part of this explosive growth in nerdish tabletop gaming and long may the nerds reign.

[cockerhoop] 22/1/2019 08:16

RM, so do the company which is why they've doubled capacity in Nottingham.I've also noticed recently that some products for example Malign Sourcery are manufactured in China - which was a surprise.

[radioactive_man] 22/1/2019 08:03

What I like most about the growth in the US is how much of the demand is coming from independent retailers. This shows that there is a lot of 'demand-pull' rather than growth paid for by marketing.With a relative lack of competition in a space growing in popularity this is a very encouraging sign for GW and its expansion into the states. I missed out on the UK boom that led to the re-rating of the share price but bought in recently as I think there is still a lot to come.

[nod] 21/1/2019 22:06

Good article, RM.Now we have breached The Wall and have a strong foothold in the USA we have many more wealthy addicts.

[robinnicolson] 21/1/2019 21:10

Radioactive_Man, thanks for the link to the interesting Guardian article. At time of writing it has already generated 201 comments.

[cockerhoop] 21/1/2019 20:25

Some interesting stuff in there, especially regarding 'The New Games Workshop' along with the steamrollering of the competition.

[podgyted] 18/1/2019 06:42

It was either the Times or the Telegraph that reported its dividend had fallen from 30p to 25p. Pretty bad research, but not the first time this has happened due to Games unusual dividend policy.

Anyway, I can wait for the share price to increase from here. Sound, quality company which to me seems to be making all the right moves.

(Can also be infuriating at times.)

[nod] 18/1/2019 04:34

The press was fairly kind this week, with no GAW comments on uncertainty for the press to make a meal of. The Financial Times headline was a dramatic "Growth slows..." but it was not negative in its short article. The kinder press and broker upgrade hasn't stopped the share price falling though.

[nod] 18/1/2019 02:43

Our Online is the most profitable channel in terms of margin (no middle man) but Trade is the most profitable channel overall and has by far the strongest profit growth as Trade expands. Trade is the only channel that can give us continued high profit growth for a few more years. GAW will be examining its business strategy as the dynamics change. Own stores are expensive to operate and are loss-making in many years. They have always been seen as essential to recruit new hobbyists, yet it was said that only around 20% of customers play the hobby at a GAW store. The ratio of customers through own stores is probably declining as Trade grows.

[cockerhoop] 17/1/2019 23:01

Nod,

GAW Online is much more profitable than Trade with operating margins of 61.5% compared to 36.6% so in an ideal world it would be better to drive sales through the GAW site but clearly this is difficult when independants (who have to have a bricks & mortar presence) sell increasing quantities via online.

It is though very promising the investment in trade sales is paying off. The numbers underplay the volume of product that go through trade as they are booked at wholesale prices (-40%ish) compared to retail & online which are RRP (ex-vat/sales tax).

[cockerhoop] 17/1/2019 22:48

Simso,

Good stuff.

I notice that GAW modified their accounting standards from 2016 concerning the treatment of development costs for moulds etc which has the effect of reducing costs of sales by approx 3.5% therefore improving gross margin by approx 1% for the last 5 periods in your table (unless of course you adjusted?)

[nod] 17/1/2019 22:23

The growth in our Trade outlets was 33% more this H1 than last year H1 (300 v 199 additional accounts in the half year). This bodes well for H2 and the coming years.Trade is the most important part of our business. Our own Online is profitable without the middle man but, as GAW highlights, this is competing with more Trade online stores.

[nod] 17/1/2019 20:47

"our gross margin and stock levels are not currently where we'd like them to be. "GAW later explains the reason for the higher stock levels: "inventory increased by gbp 7.5 million due to the timing of product launches and to meet sales demand" GAW doesn't specifically explain the reason for the decline in gross margin. It may be due to additional disruption in this half than the previous half - if so, GAW should say this, otherwise it leads to speculation. It may be due to our significant growth in Trade and/or discounting of excess stock (speculating). Let's not dwell on the little things. Lets dwell on the important things:"Trade achieved growth of 26% with growth in all key territories. In the period, our net number of trade outlets increased by c. 300 accounts which helped drive forward sales in this channel. A large number of our independent retailers now also sell our products online which in turn has given our customers more places to buy our products online. "

[cockerhoop] 17/1/2019 11:26

In the context of Games Workshop, 67% is sub par and Kevin said as much in the Interim report. I'm confident that we'll return to around 70% once the temporary disruption caused by the expansion works its way through the system.

[nod] 17/1/2019 10:31

Good research, simso. 67% gross margin is very good. If we had a dip to 60% I might be concerned.

[simso] 17/1/2019 09:48

With regards to the debate on Gross Margin % and the decline v LY, it is interesting to look at a wider context to try and understand if there is a "trend" in Gross Margin. Starting sequentially, half by half from Y/e May 14:-

72%(to Nov 13); 69%; 69%; 69%; 70%; 67%; 70%; 73%; 74%; 70%; 67%(to Nov 18).

Not an obvious overall trend,rather that the Margin has bounced around between 67% and 74%. The clear spike up to 73% (half to May 17) and then 74% in the following half look exceptional and perhaps outside the longer term norm? I suspect mix of sales plays its part, and would assume the peak margin of 74% in the half to Nov 17 could be a very high mix of new WK40.

[rick802] 16/1/2019 14:01

Can't break that resistance

[nod] 16/1/2019 10:05

Just to finish the post with numbers from the Interims:Profit increase from Trade gbp 5.4 millionProfit decline from own Online gbp 0.5 millionNet gbp 4.9 millionI would not sweat about the small decline in own Online store. Maybe this is something we have to live with in this expanded universe.

[nod] 16/1/2019 09:49

Martin, GAW kept very tight control over its Trade partners via a draconian contract. This resulted in quite a lot of disputes and a few court cases or threats thereof. My understanding is that, as a piece of its growth plan, especially in the USA, that the Trade terms were relaxed a little. The Trade partners were prohibited from disclosing any parts of the GW contract, so it was only during a divorce that these clauses would be leaked. I assume that GAW makes much the same profit on products through Trade. There may be some high volume discounts to the larger Trade customers. So, if the Trade operator discounts 20% this comes out of his margin and not GAW's. So, GAW doesn't lose on its sales to Trade selling at a discount but potentially there is some loss of sales in GAW's own Online sales as it competes with more Trade online retailers. IMHO this is a small price to pay when you compare the huge growth in Trade with the small loss of sales in GAW Online. GAW doesn't strike Trade deals that would erode its own store sales based on geographical location of the stores. But Online has fewer geographical borders.

[cockerhoop] 16/1/2019 08:51

Martin,

I think the majority of the reduction in gross margin 72% H118, 70% H218, 67% H119 is caused by production & distribution inefficiencies during expansion. This can be seen in the results with the reduction in profitability of the Product & Supply segment (down from £13.1m to £9.5m on higher turnover), this should reverse once expansion complete.

[shanklin] 16/1/2019 08:30

So how does GAW get control over the margin erosion, only allow part of the product range to be sold by independents? Or is this just a feature of their business which we will have to live with going forward?