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 Post subject: Re: GW share prices down 24%
PostPosted: Fri Jan 17, 2014 11:45 pm 
Elven Warrior
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I remember when I started the hobby there was a loyalty card, when you spend cumulatively 23x10euros in store you would get 23euros to spend on more stuff, be it minis, paint, scenery or anything they sold.
That is one of the reasons I was so loyal to them at the time, that and they were friendly and creative.

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 Post subject: Re: GW share prices down 24%
PostPosted: Sat Jan 18, 2014 1:20 am 
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At the end of the day you can't go in with a tenner and come out with anything decent. I remember my first purchase was some Warhammer high elves, 8 for under or around a tenner (2001?). I wasn't all that into elves but I got them to give it a try. I'd say 1/10 of the lads I went to school with probably bought a box here or there out of curiosity over the years. That's just not possible these days. I know from my own shop that people aren't gonna spend 35 quid to give something a try.

I'd hate to see GW go to the wall, but I just don't see how anyone relying on pocket money could even dream of getting into it.

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 Post subject: Re: GW share prices down 24%
PostPosted: Sat Jan 18, 2014 3:43 am 
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Creaky wrote:
From what I understand of their finances (which is admittedly a very little amount), their store chains are like an anchor dragging them down, and I'd expect them to go unless things improve, becoming an internet only business then.


Just based off my local area, I say youre 100% correct. For one, they put their stores in stupid locations. I understand they want them in more upper class neighborhoods where people can pay for them, but by me, they put them in three places within 35 minutes.

1-an expensive mall here with higher end clothing, and lots of jewelry stores
2-a small store front in a hidden location on an expensive street of fancy stores. this location though, is barely visible, even when looking for it.
3-in the middle of a large plaza with a best buy(American electronics-dont know if you guys have it) and some other stores. But literally, while this is all store fronts, you have to walk about 100 ft in through nothing to the sides to find the store. It looks like a failed attempt to make a nice way through mall that nobody bought into.

The common trait-all hard to see in high price real estate areas.

The best location was in the mall, and that closed already. So did the number 2.
Now, number 3 is closing at the end of the month, and to replace these they are making two 1 man stores.....with like 2-3 tables each. Closed two days.

Looks horrible to any one with any sense of economics of business can tell from the outside these guys were going down like a plane with one wing.

mertaal wrote:
Lots of stuff


Im not gonna quote it all, but to everything: ABSOLUTELY.

I remember cool articles and everything being so awesome. When I was in high school I was in awe. I come back 6-7 years later, and Im insulted.

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 Post subject: Re: GW share prices down 24%
PostPosted: Sat Jan 18, 2014 8:34 am 
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mertaal wrote:
It's quite simple really- if you increase prices but takings are down, you are haemorrhaging customers.

It's a complicated business. Many self appointed pundits on the net love to point out that the reason GW is loosing business is because of the continuous price hikes. I'm not so sure. i think, in fact, the price hikes are a coping mechanism to maintain the same profit levels from a smaller customer base.
The price hikes are /because/ of the lowering customer base.



I don't want to bash GW here. But I for one took the time to do the some math.
A few years ago I could buy 24 model for 26 euro. The new Hobbit models are 10 models for 35 euro. It's a price increase of about 325%. I'm a perfect example of a customer who hasn't bought anything for the past 9 months because of this price hike. :?

mertaal wrote:

Certainly, Hobby articles, terrain building projects and conversion articles don't earn them a penny. But it does create an environment in which people want to spend money. They used to have a GREAT sales strategy- built it and they will come.
Now they've penny pinched their way in to decline, because what they make just isn't that interesting any more, despite how cool the models can sometimes be. The atmosphere is gone.

In short, I think that long ago they lost the concept of "good will".


I agree on this! Some of my friend have started to play WHF as well and I kind of want to do the same. It's just that I don't feel the same excitment for warhammer as I did 10 years ago when I started with LOTR. :roll:

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 Post subject: Re: GW share prices down 24%
PostPosted: Mon Jan 20, 2014 12:11 am 
Elven Warrior
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I've written an article on my blog about this using quotes from GW's financial reports explain why this happened and why GW has been doing what its doing. You can read it herehttp://fiendsinwaistcoats.blogspot.com/

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 Post subject: Re: GW share prices down 24%
PostPosted: Mon Jan 20, 2014 9:08 am 
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kidterminal wrote:
I've written an article on my blog about this using quotes from GW's financial reports explain why this happened and why GW has been doing what its doing. You can read it herehttp://fiendsinwaistcoats.blogspot.com/

Rob


Read your report, very well put together and thanks for writing it.
I think your conclusion is wrong, the IP is to valuable for receivership, I think there will have to be major changes in the company, which we all talk about, getting back to basics, prices, etc, etc. but i dont think they will disappear.

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 Post subject: Re: GW share prices down 24%
PostPosted: Mon Jan 20, 2014 1:19 pm 
Elven Warrior
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I'm in agreement with Harfoot. Great article, and interesting points, but there are far too many variables to predict bankruptcy in 6 years. They've only just started to loose control. If the shareholders see further drops in price then the people in the top jobs will be up for replacement- hopefully with people who have a better idea of how to profitably give customers what they want, instead of telling customers what they want, and trying to force them to buy it regardless.

They still take 60m annually. That's a lot of money to play with, for someone to go in and make things right. I just hope that someone realises that the loss in revenue is down to forgetting the first rule of business: the customer is king.

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 Post subject: Re: GW share prices down 24%
PostPosted: Mon Jan 20, 2014 2:14 pm 
Elven Warrior
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I hear what you guys are saying but you fail to understand that the shareholders are aware of what's happening everything they control the board. If they didn't like what's happening they would have made changes. They want a large return for their capital and they are getting it. There is still plenty of revenue to take so they will continue to take it. Once they are done they will put it into receivership and some else will buy it but by that point GW as we know it will no longer exist.
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 Post subject: Re: GW share prices down 24%
PostPosted: Mon Jan 20, 2014 3:43 pm 
Elven Warrior
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With respect, I'm not sure from your last post that you fully understand how public companies work.

Shareholders only knowledge of company figures come through annual or bi-annual reports/financial statements like the one we're now discussing, so no, they did not know about their poor figures until the latest report was published. That's why the share price dropped so drastically overnight- the poor figures became public knowledge, which impacts on the profitability and therefore value, of the company (and the company stock, which is ultimately the same thing).

Shareholders do not "control the board" any more than democratic citizens "control the government". They have a periodic right to vote at annual meetings, and those votes can include removing the board of directors if they are not performing. Between those periods they have no direct control over the business decisions that management take (although if the brown stuff really hits the fan they can call an emergency shareholder meeting and make changes).

Basically the board answers to shareholders, but operate as they see fit.

If you hold shares in a company which goes in to receivership your stock is worth zero, and so no right minded investor wants to see dividends at the cost of stock value.

Furthermore, they are not now getting a large return on their capital- the value of their capital just dropped by a quarter. The shareholders just lost a quarter of their position (money). They all lost a lot of money. As the company's working profit just halved, the stock is not paying dividends as well as loosing value. There's a big difference between revenue and profit. GW have a lot of revenue, but they aren't making much profit at the moment.

So the shareholders aren't happy about this state of affairs either.

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Last edited by mertaal on Mon Jan 20, 2014 3:53 pm, edited 1 time in total.
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 Post subject: Re: GW share prices down 24%
PostPosted: Mon Jan 20, 2014 3:51 pm 
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kidterminal wrote:
I hear what you guys are saying but you fail to understand that the shareholders are aware of what's happening everything they control the board. If they didn't like what's happening they would have made changes. They want a large return for their capital and they are getting it. There is still plenty of revenue to take so they will continue to take it. Once they are done they will put it into receivership and some else will buy it but by that point GW as we know it will no longer exist.

I don't really think you can jump to such conclusions, that is merely an opinion and I don't understand where your prediction of 6 years has come from, ok the share have drastically dropped but this may signal the repair of the company and bring it back to the days of packed shops fair prices and quality minis so I don't think such negativity is good for the company or the customers... I'm sorry but I just completely disagree with that part or your "report"
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 Post subject: Re: GW share prices down 24%
PostPosted: Mon Jan 20, 2014 4:02 pm 
Elven Warrior
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Yes I've overstated myself in the control the shareholders have. The overvaluation that GW management has pursued for the last 10 years has naturally attracted funds looking for a good return on their money. Now that GW is not declaring a dividend and the share price has dropped so drastically the funds will sell their shares and abandon GW essentially driving it into receivership. GW isn't a large enough company for any of the funds to take an interest in changing management so they will abandon the stock.

Management has killed the long term prospects of the company through its actions and will not be able to recover.
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 Post subject: Re: GW share prices down 24%
PostPosted: Mon Jan 20, 2014 4:12 pm 
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Doesn't work that way. The stock price is just a piece of paper. It could in theory drop to $0.01, and GW will still make the same revenue, pay their employees, their rent, etc. Once the company goes public, the price of the share has no impact on the day to day running of the company, other than executive panic.

Price drops won't make the major stock holders (which are not the same as the "shareholders" you're talking about) happy of course, so they'll have two options:

1) they try to bail. But they won't want to write off a sum like that, they'll try to sell their shares so someone else can take the hit. But the act of selling will make the price drop, so it's not a great situation
2) they'll force the reinvention of the company by canning management and trying to change the direction the company is headed.

If they intend to keep their investment, 2 is their only real option.
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 Post subject: Re: GW share prices down 24%
PostPosted: Mon Jan 20, 2014 4:31 pm 
Elven Warrior
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I'm sorry I didn't make myself clear. I didn't intend to claim a conspiracy of shareholders. Management specifically Mark Wells made a concerted effort to overvalue GW stock attracting investor funds looking for a good return on their money. So for the past few years it seemed to the funds that GW was doing well and gaining market share why else would it be paying out so much to its shareholders? But as we all know its loosing, not gaining market share. Now that the funds are aware of this overvaluation they will continue to dump their shares driving it into receivership as you have said. Mr. Wells has succeeded in leaving at the right moment.

GW is too small for any fund to bother meddling with management besides that's not really what they do. There is no real replacement of Mark Wells yet so in theory they could get some who cares about the business to run the company. That would be nice.

But you are discounting the change from the old GW stores we knew to the tiny one man stores on back streets and the restrictive new independent stockist agreements. GW management has gone out of their way to cripple their retail arm and this revenue loss is the direct result of it.

If they do appoint someone who cares about the company as CEO that person would need to invest big to get a thriving retail presence back. That will require a lot of capital which plummeting stock prices will hamper.

The real problem is that they would need to throw out all of the current management team in order to get a team that knows how to run this business. They aren't going to throw themselves out so I don't see this happening.
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 Post subject: Re: GW share prices down 24%
PostPosted: Mon Jan 20, 2014 6:30 pm 
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kidterminal wrote:
If they do appoint someone who cares about the company as CEO that person would need to invest big to get a thriving retail presence back. That will require a lot of capital which plummeting stock prices will hamper.


True, if they need to go back to the market for new investment capital, then the stock price matters. But do they really need that yet? They still made 7m in profit last year, so they do have some room to turn around.
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 Post subject: Re: GW share prices down 24%
PostPosted: Mon Jan 20, 2014 7:07 pm 
Elven Warrior
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whafrog wrote:
kidterminal wrote:
If they do appoint someone who cares about the company as CEO that person would need to invest big to get a thriving retail presence back. That will require a lot of capital which plummeting stock prices will hamper.


True, if they need to go back to the market for new investment capital, then the stock price matters. But do they really need that yet? They still made 7m in profit last year, so they do have some room to turn around.

Yes they still have money and not declaring a dividend allows them to keep it. But this will cause the stock price to drop some more.

The closing of all the GW German stores and placing US and french stores under the direct control of GW headquarters will help them loose even more revenue.

So what can they do to turn this around?

They could do 2 things with the Hobbit that could save them;
Switch from their high margin approach with the Hobbit to a more modest margin. This is what they did with LOTR. When you and I were buying LOTR back in the day the models were cheaper than Warhammer or 40k models. By going for a smaller profit margin they were able to create the huge LOTR bubble that supported them in the 2000s.

Next they can create a marketing campaign for the Hobbit, taking out adds for it in computer gaming magazines and fantasy film publications, heck even in Wargames Illustrated. Do flyers in Fantasy Flight board games, etc... Remember the movies are all ready generating interest, its up to GW to capitalize on it.

Again they will need capital for ether or both actions.
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 Post subject: Re: GW share prices down 24%
PostPosted: Mon Jan 20, 2014 7:27 pm 
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The closing of all German stores? This is just speculation from your side. I highly doubt they do that.
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 Post subject: Re: GW share prices down 24%
PostPosted: Mon Jan 20, 2014 7:38 pm 
Elven Warrior
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Thao wrote:
The closing of all German stores? This is just speculation from your side. I highly doubt they do that.

The closing of German stores is a rumor from Dakka Dakka and Warseer not my speculation personally. At the moment it is only a rumor.
The Reorganizing of all non UK sales departments and the placing them under direct Nottingham rule is not a rumor.
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 Post subject: Re: GW share prices down 24%
PostPosted: Mon Jan 20, 2014 7:42 pm 
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The closing of all the GW German stores and placing US and french stores under the direct control of GW headquarters will help them loose even more revenue.

Closing the Germans Stores is a rumor based on a rumor based on an opinion/editorial. Closing stores and sacking management would be as short sighted as putting UK management in charge of the U.S.Sales. None of them could even hope to know what goes on in my state much less the other 49. GW's business model has never had a chance in the US.They have not got a clue why. GW needs a new CEO.

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Last edited by Oldman Willow on Mon Jan 20, 2014 9:31 pm, edited 1 time in total.
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 Post subject: Re: GW share prices down 24%
PostPosted: Mon Jan 20, 2014 7:49 pm 
Elven Warrior
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Oldman Willow wrote:
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GW needs a new CEO.


Never a truer word. Now I imagine, shareholders will begin to share the opinion that war gamers have been thinking for years- GW's business strategy of recent years has been at the expense of its long term health.

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 Post subject: Re: GW share prices down 24%
PostPosted: Mon Jan 20, 2014 9:29 pm 
Elven Warrior
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mertaal wrote:
Oldman Willow wrote:
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GW needs a new CEO.


Never a truer word. Now I imagine, shareholders will begin to share the opinion that war gamers have been thinking for years- GW's business strategy of recent years has been at the expense of its long term health.

Yes and who has benefited from the short term inflation of the stock? Who is no longer here to worry about the long term health? As management you are either in it for a paycheck and thus presumably interested in the long term health of the company who pay you, or you are in it for the big stock payout.

Which option do you think the officers of GW chose?
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