Games Workshop in the FT Blog

[Mazer Rackham]

I make no comment on GW financial health, but I will say this is a fascinating peak behind the curtain, and very well put together.

 

I appreciate your time and effort. 

[Brother Lutheriel]

Me trying to keep up with @N1SB’s impressively comprehensive explanation. 

 

but in all seriousness. Thank you for the time you put into that. It was very helpful. 

Edited Tuesday at 11:38 AM by Brother Lutheriel

[phandaal]

15 hours ago, Mechanicus Tech-Support said:

Ah that's the thing you see, you only get the report if you sign up (and pay) for a Dragoneye subscription

 

Ah, that makes sense, and yes none of the articles links directly to the report contents, probably for that exact reason. I thought @Joe and @lansalt might have managed to find a copy, given how they were describing its contents.

[N1SB]

I just thought of a recent counter-example to GW over a rib dinner I treated myself to!  THIS you'll like.

 

WH Smith Lost £600m/40% of Its Value From Accounting Scandal

 

WH Smith was a British high street retail shop, like Games Workshop, that sold magazines, books, etc.  It's redesigned itself to being an airport retail shop, like they used to sell books to read on a flight, then over time their airport stores were the most profitable because everything's more expensive in an airport.

 

It's to do with rebates.  Our Brothers and Sisters who worked retail, you know what I'm talking about, but tread carefully please.

 

Suppliers incentivise retailers, like WH Smith, NOT with money...nono, that'd be like an illegal bribe, but through rebates.  If a retailer manages to sell a target number of a supplier's product, next time they put an order to restock it, the supplier would give them a discount.  That's future profit, very nice of them!

 

Now, if a retailer gives its own sale staff a bonus, that's also nice of them!  If the bonus is for selling a number of a specific supplier's product that JUST SO HAPPENS to match the exact target to get a rebate...well, that's just a coincidence.  If the bonus is within the amount saved by a rebate, that'd be nice, too!

 

Suppliers are being nice to retailers, retailers are being nice to their salespeople.  It's not what you know, it's what you can prove.

 

(If you ever find yourself in a shop and lead to the TV section by a salesman, TV manufacturers give very nice rebates.)

 

The issue is a rebate does NOT happen immediately; that'd be a payoff and I don't know the legality of it, but it's deferred, the promised discount happens with your next order, in the future.  Bank robbers don't flee the country immediately, they lay low, wait for heat to die down.  Honour among thieves!

 

WH Smith's North American branch one period booked all its future rebates as profit right away.  £55 million of reported North American profit should've been £5 million; the rest of the £50 million was meant to be added in future quarters.  It was their own accounting firm that caught it.

 

Before that, it had a Price/Earnings Ratio of about 12.  A loss of £50 mil x 12 = £600 mil of lost value, quite accurate.

 

As Hannibal Lecter said to Jack the Ripper, "I don't mind that you're naughty, Jack, I hate that you're sloppy."

 

And that's the difference with GW, although both shops were ubiquitous in Britain growing up...

 

 

Why GW Is Different

 

You see that's an actual reported number being totally off.  We've built financial models based on numbers reported by GW.  It's like making an army list using the latest Field Munitorum Manual's points cost and finding out afterwards there was a typo, now I really have to change my list.

 

Unless there is a misreported figure, and it does NOT have to be as deliberate as what happened with WH Smith North America, I would not've adjusted my own valuation of GW.  The Dragoneye report would have to uncover that sort of error by GW, though...and it would not be kept secret.

 

I stand by what I said, GW stock would've gone down after a 30k full-year annual report before going back up after the 40k half-year report, it was already going down before this Dragoneye report, and IF and ONLY IF there is some discrepancy, I suspect it'd be with the Trade i.e. FLGS revenue section.

Edited Wednesday at 12:18 AM by N1SB

[Xenith]

12 hours ago, Antarius said:

It probably also pays to remember that stock values are weird. They're not really tied to company performance, merely to the perception of whether the stock values will go up or down in the future.
 

That being said, if GW stock plummets, I'll definitely consider sweeping up a bunch of them.

 

It's down 25% from the previous high.

 

I think an important comparison to make is:

 

If you grab any 6 month window the share prices look bad.

 

mid 2026 mid 2025

 

Have you ever been walking up a mountain and the road dips down a bit? That doesnt mean you've crested the thing. 

Edited Tuesday at 07:17 PM by Xenith

[Scribe]

I mean I thought "time to buy" but I would wonder how GW has handled oil issues like this previously outside of price hikes first.

[Xenith]

They absorb them from profit first, then hike prices, then seek alternative materials today manufacture from. The exact same thing happened with the volatile price of tin in the early 2000s leading to price hikes then fine cast 

Edited Thursday at 12:30 AM by Xenith

[Dark Shepherd]

GWs profits in end of year report released in July only went up 4% which is not huge, this feeds into PTER as per the excellent input of Mr NS. The big funds that own GW* would prefer more

 

There were also 2 big sell offs of about £1m worth of stock that coincide with 2 of the bigger dips. Trade volume is worth a look during big dips too

 

GW have also issued extra shares (relatively small amount) in this period which is a sign theyre not worried but also can dip share price a bit. Dividend reports seem healthy too

 

*worth remembering that about 20 or so institutional investors own 90% of GW, IIRC the top 5 or so own 40 or 50%. The board own 7% which is an unusually high amount, same as the 3% owned by mom and pop/casual investors

 

Unless GW said on an investor call, which I really really cant see them doing, that 11th has been a disaster, then Armageddon has not led to a share price...emmmmmm...Apocalypse.

 

11th/Armageddon going badly is possibly going to come out in in half year report but may be hard to tell if 2025 was a non new coregame edition year

 

The one good point Ive seen on youtube about the share price/profits is we might be seeing the pandemic bounce tapering off

Edited Wednesday at 10:12 AM by Dark Shepherd