Network News: 2015 June-July GW Market Watch & Annual Report

Watching stocks over the short-term is often an experiment in futility; on July 1st 2015 we looked back at the state of Games Workshop’s stock price and general financial health.

You may have heard! There was some report thing issued by GW a few days ago. GW calls it the Annual Report, but in the minds of wargamers everywhere it is usually a time to gloat about the imminent downfall of the company. So, would this report continue the death spiral or would this report show signs of strength from the wargaming leader and silence the critics? Well, we can talk about that later, let us see how the stock is fairing since the last time we made a report and see if it can give us any hints.

One thing GW is usually right about is large geo-political events don’t have much effect on company’s stock. As you will see neither the Greek Bailout or the Iran Nuclear deal would have much effect on GW stock over the last month.

Here let us look at how GW stock did over the last month to illustrate.


GW has had a very good last 30 days with the stock rising almost 10% over the last month. Notice the bump comes right before the annual report is announced. More importantly, the bump has less to do with the report and more to do with GW announcing another Dividend to go along with the report. As the report likes to mention over and over don’t expect the Dividends to ever stop. Either way you can see larger world events had little change on how the stock performed.

How do things look though year-to-year though in comparison to this new report bump.

This is a vast improvement from last month when the stock was down 17% year-over-year. Now only down 5.5% GW is poised to cut it down even further, of course the same seen happened last year, only see the stock dive again during the 4th quarter.

Ok, now what you really want to read about the 2015 annual report. Here is the link to it so you can follow along.

2015 Games Workshop Annual Report

Let me start by saying Kevin Roundtree sounds sane, this is completely different from the deranged ramblings of Tom Kirby the previous CEO. It doesn’t mean Kevin isn’t going to paint some rosy ass shit, but he isn’t going off on tangents just for the sake of ego. Kevin instead focuses on what an investor would want to hear/know about how a company is doing and what changes/improvements are coming in the future.

There are two major number things you need to take away from this report. Profits still exist and have even grown and revenue is still down. On the revenue front the decline is down to a trickle, especially in light of currency fluctuations. This is in line with what GW has been saying for the last year, and it looks like they were not blowing smoke. Profits are up from last year growing at about 4 millions (oddly the same amount the website cost to update last year). If you believe GW, it does look like they can expect revenue to finally grow next year, along with profits to continue.

Another number thing of note is the continued grow in mail order sales. GW focus on direct web sales is paying off, whether you like it or not. They get the best margins from these sales, so expect it to be expanded.

Overall, you could pick this report apart and find the nails you want to hammer into GW, but the truth is they are turning things around their own way, the only thing that remains to see if it is sustainable and finally produces real growth.

Once you get over the numbers, there is some very important information Kevin says in his Strategic Report. Here is what I personally think are the highlights.

  • Repeat mention/allusion to dividends. Kevin makes it a point to reassure investors that the dividends won’t stop by constantly referring to cash, cash overflow, excess cash.
  • Kevin uses a group of trusted advisers to make company decisions. Tom Kirby is a “special” consultant with a focus on training and the Asia markets.
  • International business accounts for 72% of sales! A new focus is going to be applied to help lagging Continental Euro sales and building North American sales.
  • The design team has grown to 167 people with major investments going in. This explains a lot about the rapid model and book releases.
  • They only keep around multi-employee stores as long as they profitable otherwise they kill them off.
  • 37% of sales comes from trade accounts (FLGS). This is percentage much smaller than I expected and you have to wonder if mail order growth and diminishing trade sales go hand in hand.
  • GW admits short term goals are based around profit margins more than anything.
  • Kevin receives very few customer complaints and the customer is always right. Really, I think quite a few people on the Internet feel differently?
  • White Dwarf (magazine sales) are down. It seems likely they are losing money here, with many retailers just refusing to carry WD and especially Visions.
  • Product releases will continue weekly.
  • No employee raises for the upcoming year.
  • Games Workshop stores will be rebranded to just Warhammer.
  • Sigmar released to “Broad Acclaim”
  • Forgeworld finally coming to the main website. We still don’t know if this means the world can buy direct or if trade accounts can order and sell items in the store.
  • The product range is going to get a complete review. The big scary word Kevin uses is “resetting”. Prices won’t be coming down, but their might be wiggle room as GW wants to offer a range of price points.
  • Acknowledging their games are not pulling in new customers as they want by placing blame on all the wrong things.
  • Opening a new class of store in highly trafficked areas with a shiny new look. Taking a cue from Apple and Microsoft stores no doubt.
  • Finally, Kevin doesn’t like egos, he might want to start by looking over his shoulder at the former CEO about that.

There is plenty more to dive into if you want and folks with better financial understanding can make better assessments. It will be interesting to see how things progress going forward and like everyone else I cannot wait to see how the Forge World integration plays out.



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