Games Workshop reported record profits in its annual report on Tuesday, driven in large part by the huge success of Warhammer 40,000 10th edition. With extra demand for both new releases and its massive back catalogue of miniatures, the firm has stuffed an extra $11.8 million (£9.2 million) of product into its storehouse compared to this time last year. Is this enough to keep up with fans’ ravenous appetites?
Having fully emerged from the after-effects of the COVID-19 pandemic, 2023 was the first year when any difficulties that Warhammer 40k fans had getting their hands on products could be blamed squarely on Games Workshop’s stock levels and delivery systems. And problems there were.
We reported in February 2023 of game stores not receiving stock in time for pre-order windows, and in April on hotly anticipated products selling out on the day of pre-orders, only to appear on eBay at massive mark ups.
Back to back, those made for an inauspicious lead into the launch of Warhammer 40k 10th edition in June 2023. Games Workshop had been keeping its powder dry: the launch was so successful it gave Games Workshop its best sales month ever, with no scalping problems. But pre-order sellouts and scalping problems have continued, in some cases prompting direct anti-scalper action from GW.
The Games Workshop webstore is also often out of stock for older products. While GW’s massive back catalogue doesn’t sell as well as new releases, enfranchised fans eager to build a tournament-ready collection for their preferred Warhammer 40k faction or Age of Sigmar army want specific models, not just something new and shiny.
In Games Workshop’s annual financial report for 2023-24, Chief Executive Officer Kevin Rountree describes the balancing act for the company. If “too much cash tied up in stock”, the firm’s flexibility and ability to invest in new facilities and training will be limited: but “not making enough stock to support weekly new releases or existing range items” results in “sometimes leaving a few customers annoyed”.
Action is being taken: “we have purposefully, for our customers, increased stock levels year on year”, Rountree says. Specifically, Games Workshop is carrying $11.8 million (£9.2 million) more stock at the end of financial year 2023-24 than it was at the start.
Accounting for inventory at its theoretical value (ie, assuming it could all be sold at the intended price), the firm now has $61.5 million (£47.9 million) of stock on hand. We suspect this includes all stock on store shelves as well as in warehouses, but it’s not clear. Rountree notes that due to “obsolete stock disposals”, about $7.32 million (£5.7million) of that is stock is a write off.
Note that this is the stock level on hand at the moment. Games Workshop’s revenue from its core business of making and selling minis and accessories was $635.3 million (£494.7 million) this financial year – equivalent to refilling and emptying its warehouses more than 10 times. That’s a lot of Space Marines.
Not all of the problems customers and stockists have faced are tied to stock levels. Rountree continues a trend from recent financial reports by pointing out IT infrastructure as a problem. “It keeps randomly annoying us and causing temporary issues for us and our customers – particularly in order processing”. He also notes that problems with “warehousing, logistics, and distribution” have meant that customer service has “in the recent past… been below what we’d expect”.
For North American customers, Rountree acknowledges “we are still having some issues with our old IT systems at our Memphis facility”. He adds that “these issues are random which can be frustrating for us and some customers”. Memphis completed a transition to a new warehouse in April 2024, with 25 additional picking robots to speed things up, and space for more.
In the UK and Europe, problems arose from the move to the new ‘EMG’ distribution hub: “the service we provided from September to January, particularly to our direct web customers, was late”, Rountree says. He adds that the site is now delivering the improved performance it was supposed to, with most online orders going into the post within 48 hours, aided by 25 robot helpers.
Australia will face the next major warehouse upgrade. Given the disruptions to both the UK and US, Australia and New Zealand based fans and stockists have every reason to be wary of service delays while that happens. The firm is also reviewing a possible new distribution warehouse, outsourced to another company, in Europe.
Moving the firm’s main UK warehouse to a new site has enabled GW to refurbish and convert its original building “to become our dedicated materials and component warehouse”. Situated close to the firm’s factories in Nottingham, this has enabled “a more just in time service”, where the factories can easily get fresh materials and parts when they need them and don’t have to waste space on storage.
As we reported last month, Games Workshop is also planning to open a fourth Warhammer factory. The new building will focus on packing, freeing up space in the other three factories for more production. As part of the build, GW plans to add a new tool store for model-making molds.
For fans, perhaps the most important question is how this additional capacity, deeper inventory, and more efficient delivery will be used: to keep old products in stock, or to create larger stockpiles of hot new products ahead of pre-orders?
Rountree’s provides this, rather corporate, statement in the report: “we will need to continue to be ambitious on our new release product performance and at the same time pragmatic when forecasting customer demand on our existing ranges”.
Make sure you read up on Games Workshop’s plans for global expansion, and the deadline facing the proposed Henry Cavill Warhammer 40k film project, both also revealed in the latest annual report.
Source: Wargamer
