Games Workshop put out their Six month financial report on Friday and it’s set off yet another round of controversy. Come see why the sky may NOT be falling!
The Guardian published an scathing article last week about how Games Workshop’s sales “were below expectations”, but is it really that bad in Nottingham? Let’s take a look.
First off I would like to say that I am NOT a financial person, I am just a writer who has what I consider an “informed opinion” about (Games) Workshop as a company, from being in the retail industry for 25 plus years, AND being entrenched in the hobby since the mid 1990’s on both sides of the counter.
5.) Age of Sigmar Did Bad – ‘Nuff Said.
It should be no shocker to anyone including GW themselves that they fumbled the ball and botched the launch of what is other wise a great game system. Sure it’s not Fantasy, it’s something different. They should have positioned themselves differently for the launch by vaious means and reaped the rewards of a great new product line. Instead they are 7 months in and playing cover your ass.
4.) Games Workshop Tried To Sweep it Under The Rug
After previously announcing that they would publish their six month report on Tuesday the 12th, GW instead published the report, which they knew contained bad news, on a Friday as everyone was leaving to go home. Many companies deliver the bad news on a Friday from firings to lay offs, it makes the blow easier to take.
Shame on you Workshop- you flat out lied to your shareholders in an attempt to make this jagged pill easier to swallow.
3.) God Save the Queen
Now onto the more Marco of considerations, the British Pound actually lost value from this time last year. As of January 8th of 2015 the British Pound vs. the US Dollar dropped in value by about 4%. So in theory an overall revenue decline of 2-3% just in general is not outside the realm of possibility IMHO. So even if things stayed stagnate sales wise (which is never good either) there would have been a Net loss because of the conversion.
2. 40k To The Rescue?
So if Age of Sigmar under-preformed and the Pound softened so much, how did they even manage pull to within £600,000 of their sales expectations for the year?
Well pretax profits were flat at £6.3m, and they expect their profits to NOT exceed £16m now, which is down £.6m from their original estimate. So that being said they are now projecting to make roughly a £10m profit in their second half to close the gap with their revised estimates.
So here’s how I see it: £.6m down from last year = a 3.75 percent drop in profits (based on the new £16m estimate) that is on par with the 2-3% currency valuation issue of the pound. Now take into account sluggish Age of Sigmar sales that waylaid about three of these months from July to roughly October, and it appears that whatever came out from October to November 29th carried the team across the finish line to make up for a dismal summer.
That folks may have been the new Tau, the highly anticipated Betrayal at Calth, and Black Friday weekend. Now it looks like they just gotta keep up the pace, and finish strong with a £10m profit in their second half.
1.) The Hits Keep On Coming
It seems like 40k did carry the day for the company, with the new release of the TAU and of course the Betrayal at Calth. More importantly it proved that Games Workshop can still make hits. First with the Stormclaw and Deathstorm boxes in 2014, then with the Execution Forces earlier in the year, they have established a proven track record of one off sets that people WILL purchase!
Now one BIG thing to keep in mind, technically this report is only for FIVE months, and does NOT take into account from November 30th forward. So the whole month of December has not even been considered in any of these equations as of yet from what I can tell.
Plus at the end of the day, sure profits may be down and such, but really how much money does GW need to operate? We’re talking about 16 MILLION POUNDS (~ 20 Million Dollars) profit to make toy soldiers! That’s a lot of money in profits for a company that is vertically integrated, and basically trades in a major part on it’s Intellectual property.
Games Workshop Financial Roundup
Haters are going to hate, but from this perspective Games Workshop is still in this fight y’all!
Top 3 New 40k Formations – The Long War Podcast Episode 33
About the Author: Rob Baer
