Games Workshop stock lost 25% yesterday after release of their 6 month financials.
You can download the financials here.
The key numbers are:
Revenue £60.5m (2013) £67.5m (2012)
Pre-tax profit £7.7m (2013) £11.1m (2012)
That means that sales were down about 12% and profit down about 30%. Those are huge numbers. What is notable is that the profit is down so much despite major GW efforts to reduce costs and restructure their retail. And their gross revenue is down despite the past two years or price increases.
INTERIM MANAGEMENT REPORT
First half performance
Sales in the first half of the year were down against the comparable period in the prior year, continuing the trend that developed in the second half of 2012/13. During the first half, the rapid transition from multi-man stores to one-man stores and the reduction of trading hours across the Group caused disruption in our retail chain. We also experienced some decline in sales through independent stockists.
We view these as short-term issues and expect to see growth return in bothchannels. We continue with our store opening programme (27 stores opened, 20 closed in the period) secure in the knowledge that our one man model allows us to ensure new openings are profitable. In the future we expect to benefit from the more focussed selling operation across all channels against the background of a materially lower cost base.
Changes to operating structure
We have just announced a major re-organisation of our sales businesses to allow management by channel: retail, trade and direct. Our retail businesses will be consolidated under a single Retail Sales Manager for each of our key geographic areas – UK, Europe and North America. Trade sales will be consolidated into a global business, operating from Lenton, Nottingham.
Prospects
Our costs are well under control and margins remain strong. Cash management is good and our capital expenditure continues as planned. The principal risks and uncertainties for the rest of the financial year relate to sales and the implementation of the structural changes we have just announced. Whilst profit will remain under pressure during the implementation of the structural changes mentioned above, the board remains confident in the future growth and profitability of the Group.
Going concern
After making appropriate enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason they have adopted the going concern basis in preparing this condensed consolidated interim financial information.
First half performance
Sales in the first half of the year were down against the comparable period in the prior year, continuing the trend that developed in the second half of 2012/13. During the first half, the rapid transition from multi-man stores to one-man stores and the reduction of trading hours across the Group caused disruption in our retail chain. We also experienced some decline in sales through independent stockists.
We view these as short-term issues and expect to see growth return in bothchannels. We continue with our store opening programme (27 stores opened, 20 closed in the period) secure in the knowledge that our one man model allows us to ensure new openings are profitable. In the future we expect to benefit from the more focussed selling operation across all channels against the background of a materially lower cost base.
Changes to operating structure
We have just announced a major re-organisation of our sales businesses to allow management by channel: retail, trade and direct. Our retail businesses will be consolidated under a single Retail Sales Manager for each of our key geographic areas – UK, Europe and North America. Trade sales will be consolidated into a global business, operating from Lenton, Nottingham.
Prospects
Our costs are well under control and margins remain strong. Cash management is good and our capital expenditure continues as planned. The principal risks and uncertainties for the rest of the financial year relate to sales and the implementation of the structural changes we have just announced. Whilst profit will remain under pressure during the implementation of the structural changes mentioned above, the board remains confident in the future growth and profitability of the Group.
Going concern
After making appropriate enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason they have adopted the going concern basis in preparing this condensed consolidated interim financial information.
I will be adding commentary on the above this weekend.
Nykona
4 comments:
Sounds like a good time to buy gw shares to me as the restructuring could account for some of that down turn and their product is stronger than ever, so should result in increased sales in the future.
They've still got the best games, fluff and minis in the business by a long chalk as far as I'm concerned so deserve more really.
Smaller stores open less often in worse locations, less people at games days. less new entry level products, less sculpted miniatures, no metal, less new fluff, all add up to less sales and less profits. I am looking for some shares, but they won't be with GW's until they start looking to take their business forward again.
Best fluff and minis, but not the best games.
well I don't know about no metal = less sales, after building some thunderfire cannon's I can say that while I'd prefer Plastic over Finecast, I'd have never bought a thunderfire if it was metal.
I'm not saying all finecast is awesome, anything smaller than a terminator is REALLY scary on how fragile it is, but i'd take Finecast over metal anyday, and plastic over finecast period.
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