Games Workshop Annual Report

Games Workshop released its annual report to stockholders and the world at the end of June.  Some things I found interesting in the report:

-Sales for the company are up about 3% overall, due mainly to strong sales in the US and online.  Sales in continental Europe, though, performed lower than expected. This argues against any changes by the company in its marketing strategy of limiting information about new releases to just prior to the release, as GW can point to increased sales as evidence that the strategy worked. 

--operating profit also increased about 25%, again confirming, in the company's eyes, the success of the current business strategy.

--GW generates roughly $275,000 per year in royalties from licensing its games to Fantasy Flight Games.--
--the company is shifting to a "one man store" format for its retail locations, with 274 stores out of a total of 412 open only 5 days a week and run by one store manager.

--GW plans to close 28 US stores and open 38, taking the total number of stores in the US to just over 100, about a third less than in the United Kingdom.

--marketing plans focus on getting the fastest selling products into independent stores. From he annual report: 

During the last year we have introduced and delivered our new trade standards for our independent stockists. The aim is to get thoseproducts that will sell the fastest into whatever space the independents will allow us. That way their

stock turn will rise and we will have more re-orders. It seems so obvious that it shouldn’t need saying, but we deal in a product that sometimes allows passions to over-rulecommerciality. Many of our independent stockists and our own sales people are fans as well as customers and it helps all round if we havea system that emphasises sales potential over aesthetics. 

 

--inventory onhand dropped by about $2 million from the previous year, something we have noticed in the increased time it takes to get a special order and the limits often placed by the company on the size of orders of new releases, as well as the quickness with which a product moves from trade (meaning we can reorder it weekly) to direct (meaning orders can take 1-3 weeks to arrive).