Games Workshop has announced that profits for the company are down, technically along with revenue too- here’s why.
We can probably all agree it has been a slower six months (compared to last year) for the model makers from Nottingham. Games Workshop has released its trading update for their half-year 2021 sales and revenue, and it’s pretty interesting.
Update: This post was edited to say ‘Games Workshop’ as the author of this report is technically unknown although ‘the board’ is referred to several times.
Even though the profits are down, they seem to think there is nothing to really worry about in terms of the company slowing down, well more than they already have.
The good news for investors and employees alike is, they are still getting paid for their loyalty.
As in the prior year, we are paying £2,500 in cash to each employee under the Group Profit Share Scheme in December (£6.9 million; 2020: £6.2 million) to reward their exceptional contribution to our performance. Dividends declared in the period are 100p per share (2020: 80p).
GW Profits Are Down
Their May numbers were soaring amid COVID, so are the six months since summer a sign of the times? The company says the decline in profits was due to ‘paying more to our great staff’,’ increases in shipping prices (carriage costs), etc. Basically, there was a lot more overhead this time around.
It is possible that the decline had more to do with some of their continued missteps with things like Warhammer+, the 40k App, IP stuff, etc? We can’t be really sure from this update, but let’s take a closer look at what we do know right now.
Source Games Workshop:
Games Workshop is pleased to confirm that trading since the last update in September 2021 is in line with expectations. The Board’s estimate of the results for the six months to 28 November 2021, at actual exchange rates, is sales of not less than £190 million (2020: £186.8 million) and profit before tax of not less than £86 million (2020: £91.6 million).
Our operating profit-pre royalties receivable is estimated to be down c.£15 million. However, excluding foreign exchange movements, increased carriage costs and the costs of paying more to our great staff, our core business operating profit is broadly in line with last year’s exceptional performance.
As we said, the profits aren’t falling through the floor, but a £5 million decrease (in profit) is the first time we’ve seen something like this in a while. The sales are actually up, but not at the booming rate of COVID. Technically revenue is DOWN over the rate it increased last year- which is probably a bit to be expected given the quarantine bubble, current allocations, etc…
Licensing Income Increase
Licensing income has increased to c.£19 million (2020: £8.7 million) driven by significant computer game licensing deals with Nexon and other major licensees. The related guarantee income is recognised on signing the contract in line with our usual accounting policy.
One area of increase is licensing. It feels like GW might be starting to realize how much they can make from licensing and not trying to control everything themselves. Games and products through 3rd parties could be the way of the future!
But keep in mind the 10m increase in licensing made up for a 10m in shortfall somewhere else. We think it’s potentially on the retail side as multiple retailers worldwide have reported ‘soft’ sales to us amid allocations and waning interest in Games Workshop as a whole.
Compared to Last Year & Profit Share
When you look at last year compared to 2019, there were some insane profits and revenue increases going on. It almost seems like that in the current era, last year’s growth is something that shouldn’t be expected again in general. That’s of course non-withstanding the potential lower engagement level among hobbyists in general that Games Workshop seems to either be ignoring or are unaware of in their official reporting.
After polling stores worldwide, we expect a general decline in revenue overall starting with these numbers, unfortunately.
Games Workshop was great once, and they will be great again.
However, it may only happen when they actually start providing real value, and stop relying on incessant FOMO and Paywalls to milk hobbyists for every last dollar.
Here are more articles on the issues that Games Workshop is facing now as their stock has dipped and investors have taken notice:
- What the Community Thinks About the New 40k Rules Updates
- Is Warhammer+ Plus Worth It: Everything You Need To Know
- Games Workshop NDA Leak More Damaging Than Their IP Policy
- YouTubers Have Started Attacking Warhammer TV
- Boycotts Don’t Work, Do This Instead to Games Workshop
- Lookout YouTube, GW Just Updated Their IP Guidelines
- Where GW Fan Creativity Ends & IP Infringement Starts
Did you buy more or less Warhammer stuff in the last six months, and why?
Let us know in the comments of our Facebook Hobby Group, or our new Discord server, and make sure you enter the latest monthly giveaway for FREE today!
Get ad-free access to the site, a monthly crate of miniatures, and support some of the best creators out there for as little as $6 a month on Patreon!
About the Author: Rob Baer
