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Business of Games (BoG) is our regular series looking at the business of games from the perspective of the gamer.
Six months ago, we brought you word of GW’s announcement that they were raising prices and questioned how GW was doing in the current economy. Well, they’ve just released their second half numbers and the results are very interesting!
The number everyone has been most interested in is the supply cost figure (the formal name is the “input cost”, particularly given the rapid increase in the cost of metals that has been driving up costs across the board in the miniature gaming hobby (no pun intended – I swear!). While these costs aren’t reported directly on earnings statements, you can see their result by looking at margin and the result is impressive. GW somehow managed to increase their gross margin to 71.4% from 70.1% – for those who aren’t mathematically inclined, that means that GW managed to make a bigger profit on each sale than they did last year. A cynic might point out that the company-wide price hike might have had something to do with this increase, but I doubt that’s the whole picture – GW’s supply managers are working some serious magic. All of this is on top of raw sales being up £7.3MM over the previous year.
What else was interesting the last half numbers? Well, we made a rather big deal out of the fact that GW has been operating at a loss lately. Well, they’ve certainly turned a corner on that front as well – going from taking a pre-tax loss to actually turning a profit of 3.1MM. I think its safe to say that if GW can show improvements like this, they may have have finally shrugged off some of their earlier issues. Heck, they even opened more stores than they closed this year – I’m pretty sure that most retailers can’t say the same.
So how is GW using their new found profit? Essentially, they’re using it to pay down debt. There seems to be a little bit of use around expanding hobby centers and some basic reinvestment, but the majority has gone into paying off the debts they’ve accumulated over the past few year (reducing their debt by 4.2MM to 11MM).
So what does this mean for your average gamer? For the most part, things seem good. While you’re not likely to see a drop in prices (things just don’t work that way generally), you’re very likely to see a greatly increased GW presence in your area (though if you’re in the US, that’ll probably be through a hobby shop) with greater levels of support and product. I’d also expect to see the continuation of the recent trend of rapid, high quality releases as this has likely contributed a fair bit to that increase in sales. Bottom line, GW seems to have recovered from their recent illness which is going to make it more likely that you can find product, find gamers and otherwise have a positive hobby experience.
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“So what does this mean for your average gamer?”
Nothing, unless you’re also a shareholder.
GW lowe prices? LOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLO