Games Workshop is back in the cross hairs of investment writer Richard Beddard, and he’s got some tough love for the folks over at Nottingham.
Remember recently when I talked about how despite a loss in profits, GW continues to open stores, and create more overhead for themselves in the shorterm? Well maybe they are in denial, as Mr. Beddard thinks:
“There’s bad news about revenue and profitability in Games Workshop’s half-year report and no adequate explanation. Maybe the company’s in denial.”
Look at all the blanks he fills in from the report that’s been such the hot topic as of late:
Full article: Games Workshop: In Denial
Choice Highlights:
“Games Workshop failed to report the one thing I was looking out for in the half-year to November 2015, an increase in revenue, although on a constant currency basis it did rise (by less than 1%). …Profit from the sale of miniatures and games, the company’s core business, fell 15%.
Irritatingly, Games Workshop didn’t provide an explanation, which is surprising since, in its previous full-year results, it had promised a sales drive.
Delving into the segmental results in note 2, which are admirably thorough, it’s easy to pick out a culprit from the line-up. Games Workshop’s trade channel made an operating profit of £5.8m and its mail order channel made a profit of £6.2m, but it’s retail channel made a loss of £2.5m, more than double the loss it made for the same period the previous year.
…But maybe the company can’t recruit managers of sufficient calibre because running a one-man store is too much work for one man. Maybe one man cannot show people how to model, run games, and serve paying customers at the same time. Trials of larger multi-man stores in Sydney, Munich, Paris and Copenhagen suggest, at least for locations where there are lots of customers, one man stores are not the answer.
I also worry that despite the unsubstantiated claim that Games Workshop has launched some “great new products”, the company’s new version of Warhammer, Warhammer Age of Sigmar, is not doing as well as hoped.
…Perhaps by focusing too much on maximising profit through cost cutting, the company is neglecting the recruitment of new hobbyists. Or perhaps the much smaller armies of rival fantasy wargaming and modelling companies and the armies of illegal clones sold on the Internet are chipping away at Games Workshop’s franchise. In a more competitive world profitable stores in less popular locations may be oxymoronic.”
You may remember the bombshell of Mr. Beddard’s previous column on Game’s Workshop’s performance here:
A Relentless Profit Machine
Mr. Beddard’s credentials:
“Richard is companies editor of Interactive Investor and a columnist at Money Observer magazine. A keen private investor through his Self Invested Personal Pension, he manages two virtual portfolios. TheShare Sleuth portfolio is a hand-picked collection of mostly small-cap value shares, while the Nifty Thrifty is a mechanical portfolio designed to pick large, successful companies at cheap prices.”
This is the one part I personally don’t get:
“it’s retail channel made a loss of £2.5m, more than double the loss it made for the same period the previous year.”
So why are they still running to open stores at such a frenetic rate?
Games Workshop Financial Roundup
~ Well that escalated quickly.
