Monday, July 28, 2014

GW Financials: Pre-Game Show

by SandWyrm

GW posted a link to their full-year financials today on the investor relations site... Without the link to the report itself. But, I went ahead and checked the public FTP directory where the report would be, and while it isn't there either, there is a published PDF of the chairman's preamble, which is itself both foreboding and somewhat bewildering. Here's a few choice excerpts. Including the announcement that Tom Kirby will be stepping down from the CEO spot next year.

"Games Workshop has had a really good year. 
If your measure of 'good' is the current financial year's numbers, you may not agree. But if your measure is the long-term survivability of a great cash generating business that still has a lot of potential growth, then you will agree."
Yep. The numbers are bad.

There's some rambling about all the expensive changes they've made to the business... Then he lets it drop that the new web store cost them about £4M. Four million? Really? That seems like a lot for what they got.

There's some hand-wringing over the last year's legal battles... plus a rambling paraphrase of a Steve Jobs quote, and what I assume is his attempt to relate/spin some conversations he's had with detractors.

He then scoffs at 3D printing. For a moment I thought he was announcing a 3D printing strategy, as he talks of Citadel someday selling models that way. But that looks more like a pie in the sky idea statement, rather than a strategy.

Then we get a bit of real news. That Tom Kirby will be stepping down as CEO.
"On the first of January next year I will be stepping down as CEO of Games Workshop. I intend staying on as non-executive Chairman (if the board will have me), so those of you who want to see an end to these preambles (rhymes with rambles), don't get your hopes up just yet."
Then more rambling about the job specification and application process... does this belong in an annual report preamble?

The Takeaway

This is not the Tom Kirby that we're used to reading when going over GW's financials. I hate to use the word 'broken', but his words are rambling, and show a clear lack of confidence. I can only assume by this that GW's numbers are not just down, but WAY down. Catastrophically down. Putting a lot of pressure on him as CEO, and his own personal net worth as their top non-institutional stockholder.

Guess we'll see what the actual damage is in the next few days.


  1. Replies
    1. According to the investor site's calendar, they'll be releasing it tomorrow.

    2. That preamble is amazing. It is hard to imagine that it will lead to investor confidence. "We spent a bunch of money getting rid of people and a new webstore and suing people. We essentially fired everyone in middle management because ????" He even knows it is a ramble but size he is being aged out anyway it does not matter.

    3. Yeah, it's the ramblings of a guy who just doesn't give a crap anymore. The numbers must be awful.

    4. If you check the FTP directory, you'll see a list of items up for a vote at the next investor meeting. The last one is whether GW will be allowed to buy back its own stock at an inflated price.

      Always a bad sign.

    5. I'm sure the list of things up for vote are much more coherent than Mr. Kirby. I still don't care to read it.

      From Kirby's ramblings, I'm guessing the numbers are between 'pretty not good', and 'downright dreadful'. It sounds as if he's trying to reassure investors that 'We stripped everything to the bone, and defended our borrowed ideas and IP from being itself mimicked, so much so that brighter futures MUST be ahead. Please believe me. Don't look too hard at the Numbers. After all, they're just numbers. We're interested in the Character of the direction the numbers will point us to in the future.'

      and for buying back stock at inflated prices... That seems to be a ploy to raise stock prices, OR possibly return to being privately held. Maybe just to pad Kirby's retirement (esp. if they're going to buy from him.)

  2. I'm gonna sing the Doom song now!

    1. I prefer the "crack of doom" song from the old animated LoTR movie.

  3. I like the consistency of saying they're playing a long game with the financials, and then when a strategic problem like 3D printing comes up its all "that's so far in the future, who cares. JAZZ HANDS!!!"

    3D printing is still over the horizon, but it won't be forever. If they were really focused long term, they would be investing money into handling that particular problem right now.

    1. Not just handling it, but OWNING it.

      Just as Apple took over digital music from Sony, which could have made iTunes and iPods first, but didn't put the pieces together. GW has the stores, it has the distribution, and it has digital 3D assets. Put a 3D printer in every store, and release a character customization app for phones/pads.

  4. Looks like the files were possibly removed from the site.

    1. The defective Financials post was removed from the investor relations page, but the files are still available on the FTP (second link).

  5. "We do no demographic research, we have no focus groups, we do not ask the market what it wants." - Tom Kirby, Games Workshop CEO

    1. Or more bluntly: "We know nothing about our customers or what they want. But we still somehow expect them to buy our products"

    2. This is actually a paraphrase from Steve Jobs who did not believe in literally asking customers what they want. Not to be confused with not understanding what the customer needs, however.

      I can't tell from the above quote alone if Tom means it in the literal sense or not.

    3. I doubt Kirby even knows the difference.

      Jobs didn't do much market research because he and his design teams *were* the target market. By way of luck, they discovered that their desire for well-crafted simplicity were echoed in the tech-buying population. Because of their runaway success, they never had to ask any hard questions.

      If Tom Kirby was a hard-core gamer, or even better, a tournament player, he would be able to make his decisions and see them echoed in the company's sales and growth. But instead of looking at GW's steadily declining sales as a chance to say "What's going on here?", he put his fingers in his ears and started cutting away anything that wasn't wildly profitable. While pushing out the guys (Alessio, Priestly) that did have a better grasp of players wanted.

      Market research can be a crutch, sure. But it can also serve as a valuable check on your assumptions. When he took over JC Penney, Ron Johnson assumed that people would love having everyday low prices instead of high prices and big sales. But if he had done any research at all, he would have discovered what any husband of a mid-range department store shopper knows. Our Wives LOVE the sales. They put as much effort into getting the big discount combos as we put into collecting and painting armies. They proudly show off their receipts where they got 60+% off, or walked away with a season's worth of kids clothes for $3. Everyday low prices are boring to them.


out dang bot!

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