GW sales down but profits up

By tgn_admin
In Games Workshop
Jan 25th, 2011
24 Comments
459 Views

ICv2 has posted a summary of the Games Workshop half-year financial report.

  • Zac

    I found this interesting

    “Games Workshop has closed its Shanghai facility and consolidated paint and resin operations at its Nottingham factory.”

    • KaneBlaireau

      Wait…what? I did not realise they HAD a paint and resin operation in Shanghai. That is VERY interesting.

      • Zac

        Didn’t know about the resin but their paints have been made there for a while.

        • GW has produced a number of resin accessories like the barricade sets for City Fight and bits contained in the Hero Basing kits. Their big Realms of Battle game boards come from there too I beleive. Recently Forge World was selling Grot Tanks that were marked as made in China. From what I saw, their quality was not up the Brit produced kits.

          • Psychotic Storm

            Indeed as many people on forums indicated the quality of FW casting was raised incredibly when the parts came from china, I wonder what quality should someone expect now that FW will cast its models again in UK…..

          • I can only comment on my personal experience, and the last round of chinese produced kits was way below the UK ones I already have. It will be interesting to see what happens with this now that they are moving the production. Time will tell.

        • KaneBlaireau

          Huh. I had no idea. Thanks.

  • Toqtamish

    How can profits be up if sales are down. Oh right, by charging more for the sales you do make. Great business plan

    (warning extreme sarcasm alert, viewers probably should have been warned)

    • They can also increase profits by cutting costs.

      • Toqtamish

        Except that is not the case in this one.

        • Zac

          It is I think. They have closed stores and cut some of their operation costs.

    • n815e

      All griping aside, this really is a business plan set up to fail.

  • dynath

    GW doubled its profits as of may, as of the following november its sales are now down from that doubling because they couldn’t sustain the margin. The article doesn’t say their profits are up but sales are down it says sales are down and profits are down but they were up. Their price hikes, their restructuring, etc are methods to keep the sales short fall from cutting to far into their opperating budget. Excessive and poorly thought out though their business model may be, its working as those numbers should be a lot worse considering the market.

    • Osbad

      Except that the Toy market generally has seen growth not retraction in the past 12 months. GW has done worse than most toy companies, much worse, in the period they talk of.

      Of course some may believe that GW output is not aimed at children and so cannot be considered “toys”.

      I beg to differ….

      GW always claimed its customers were price inelastic, and their niche market status immunised them from receission. However in the light of these (and prior years, where the signs of declining volume sales were less obvious, but nevertheless still there), perhaps they need to reconsider this view?

  • Grim6

    This is a poor business model: soak your shrinking customer base for more money. I think most people are looking at shrinking discretionary funds, and looking to get more gaming out of their money, not less. On the other hand, it also opens the field, as people will start looking at some of the really good alternatives to GW. Unfortunately, as noted in earlier stories and comments, some of the alternatives, like PP, seem to be also increasing their prices (Orgun Assault Corp unit @ $70, the new engine models at $85…)

    On the other hand, I saved a bunch of money by switching my wargaming from Warhammer 40K to Dystopian Wars!!! 🙂

  • Psychotic Storm

    Overall same old same old, sales fall because less people buy but profits rise because they over costed the same old items even more.

    Essentially their business model stands that the people should buy from their stores only so they get the full profit of their overpriced product themselves and not from other stores or online retailers from whom they get only the discounted price (ok I don’t now what the word is in English for the lower price the companies sell to shops and distributors).

    Well even with their attempts to steer people in their online shop economy is such that people now seek the cheapest price be it an online distributor or ebay or whatever and that is a major problem for GWs business plan.

    • Osbad

      Except profits didn’t rise. THey rose last year, but this (half-)year they fell.

      Perhaps the price elasticity of their consumers has finally snapped, and they are at the point where price increases mean profit decreases?

      • PanzerKraken

        It’s also very normal for sales to go up and down, it’s just the nature of business that pretty much all businesses deal with. It’s a bit too early to start calling doom and gloom when they have been up in several reporting periods in a row before this one.

        • Osbad

          Except again, facing reality, GW’s sales once you strip out the impact of exchange rate shennanikins have declined each year since 2004.

          In fact discounting inflation, in “real” terms GW’s turnover is no higher than it was in 2001

  • evernevermore (John)

    No doom and gloom when we are “talking” about GW – inconceivable

  • cannondaddy

    Sales are only down 4% and if I’m reading this right they have a huge margin of profit. This is a very healthy company. That’s probably good for the hobby overall, even though they don’t get my money anymore.

    • PanzerKraken

      Yes they are still making profit, they are not losing money, which I think people are missing that part. Sales are down compared to last reporting period but they had been going up for the last 2 years pretty much.

  • grimbergen

    I guess I’ll be the only one to say anything positive (or at least neutral) about GW in this discussion. I haven’t played any GW stuff in many years (besides Warhammer Quest and some occassional Mordheim), so it’s not that I’m a fanboi.

    I do agree that some of their corporate and legal practices are far from respectable. That said, there could be other less insidious reasons for raising profits while reducing sales. One could just be their cutting production/support of poor selling items and focusing on the core sellers. If the difference is between keeping the business afloat or supporting a few armies that generate little sales, I’m sure any business owner would make the same decision.

    Regarding their “high” prices: yes, there’s higher than some miniatures brands, but not outrageous. Malifaux box sets of 5-7 minis run for an MSRP $32-45. GW box sets of the same count of metal figures are also in that range, or sometimes less, while Infinity sets are even more. Warhammer singles are usually twice the cost of Malifaux singles, so ok you got me there. But it seems most gamers are only buying a handful or none of those for their armies, from what I can see at tourneys in the local store.

    Comparing vehicles — I used to build (non-gaming) models long ago, and was always shocked at how expensive they can be, so it’s not just GW with their plastic kits. They still are. Currently a 1/35 scale Abrams kit from Tamiya is $47 MSRP, $45 from Revell. The Space Marine Predator is $44.50 MSRP. Yes, I know the Land Raider is a lot more, but you also get a more stuff. We can evaluate how much the cost of plastic is very minimal in production, but the fact is the Land Raider or Dreadnought kits deliver a lot more bang for the modelling and gaming experience.

    So we’re in an expensive hobby. That’s how it’s always been and will continue to be, if you want to be wargaming. There are cheaper alternatives, but with GW you are also paying a premium for the IP (I’m sure not everyone thinks it’s great but enough that they can license like mad), popularity, and support network — again I may be in the minority, but I’ve always had good experiences with the call center and store staff in the past.

  • GS_topcow

    I’ll chip in the not so hateful wagon;

    GW has spent time the last few years in expanding their offer to more than just minis and vehicles, their terrain kits and accesories provide a new avenue of revenue, so that intermediate modellers who dont make their own terrain are spending a reasonable amount of money to have these kits available(i know i am).

    the report itself shows no big changes in policy or business model, and the actual reducing of stores and staff to save in overheads is a testament to how the hobby has changed in the past years (more games are available hence the not so large market is now more selective, so people who play different games are more likely to play on their own or go to a more open store, rather than an all GW place…), however, they seem healthy enough, which again, i think is a good readout on the hobby itself, no just the company so many of us love to hate.

    GS