$GAW Games Workshop Group Warhammer | TickerTrends.io

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Ticker: $GAW
Sector: Gaming
Share Price: £ 103.97
Market Cap: £ 3.41B

Business Intro:

Games Workshop Group PLC ($GAW), along with its subsidiaries, engages in the design, manufacturing, distribution, and sale of miniature figures and games worldwide, including in the United Kingdom, Continental Europe, North America, Australia, New Zealand, and Asia. The company operates through two segments: Core and Licensing.

GAW’s consumer brand is ‘Warhammer’, which encompasses all aspects of the Warhammer hobby—collecting, building, painting, playing, reading, watching, and gaming—set in the immersive Warhammer worlds.

The company’s two primary settings include a dark and gritty fantasy sci-fi universe, represented by ‘Warhammer 40,000’, ‘Warhammer: The Horus Heresy’, and ‘Necromunda’; and a fantasy setting featuring ‘Warhammer Age of Sigmar’, ‘Blood Bowl’, and ‘Warhammer: The Old World’.

In addition, GAW publishes novels, short stories, audio dramas, and audiobooks under the Black Library label, and creates digital content for television and animation.

Furthermore, the company offers painting and modeling supplies, boxed games, and gifts, as well as running businesses in newsstand and trustee services. It sells its products through its own retail outlets, social media channels, and warhammer-community.com, in addition to physical bookstores, online platforms, and other retail and specialty stores. 

The company has 3 factories and is now in the planning and approval stage of an additional factory, called Factory 4, on their existing Nottingham site to add capacity. 

Business Strategy:

The company’s core philosophy is that shareholder value is created, primarily, by not destroying it. The company clearing states that they have no intention to acquire other companies and plans to return surplus cash to shareholders in ever increasing amounts.

The company's growth strategy revolves around geographic expansion and the development of three main channels:

1. Retail Strategy: Games Workshop's retail outlets play a central role in promoting the Warhammer hobby in different regions, exclusively offering the company’s products. The stores serve as primary locations for recruiting new customers. However, the full range of products is not available in every store; instead, they stock starter sets, new releases, and other selected products. As of June 2024, GAW operated 548 retail stores across 23 countries, including 412 single-staff stores and 136 multi-staff stores, continuously reviewing their profitability.

2. Trade: GAW adheres to a disciplined approach when working with third-party retailers, selling to them under strict terms and conditions. Independent retailers are vital to the company’s strategy, particularly in regions without company-owned stores, helping to expand the Warhammer hobby in local communities.

Most of the sales to these retailers are managed by teams in Memphis, Nottingham, and Barcelona, with additional teams operating in Sydney, Tokyo, Shanghai, Singapore, Hong Kong, and Kuala Lumpur. In 2023/24, the company had 7,200 independent retailers (up from 6,500 in 2022/23) in 71 countries.

3. Licensing - GAW licenses its intellectual property (IP) to carefully chosen partners, helping to expand Warhammer’s global presence and brand recognition. This segment is highly profitable, with operating margins exceeding 85%, providing substantial growth in net income. A significant portion of this revenue comes from video game sales in North America, the UK, and Continental Europe.

While the gaming market remains challenging in the short term, Games Workshop's licensing team, under new leadership, continues to promote the depth and uniqueness of its IP to potential partners. The ongoing success of licensing deals largely depends on the performance of its partners in game development and delivery, which can impact cash receipts.

In addition to licensing, GAW is focusing on organic growth through ‘My Warhammer,’ an online service offering fans access to the webstore and related apps, which had 565,000 active users by the end of the fiscal year (up from 427,000 in 2022/23).

The company’s subscription service, Warhammer+, features original animated shows, tutorials, and other content, offering fans more ways to engage with Warhammer’s expansive universe. Subscriber numbers grew to 176,000 in 2023/24, up from 136,000 the previous year.

Financials: