Well, well, well. Games Workshop has just rolled a natural 20 on its financial performance. The Nottingham-based purveyor of plastic crack – sorry, high-quality fantasy miniatures – has smashed through yet another set of records. But beyond the eye-watering profit figures, there’s something juicier buried in this RNS: tangible progress on that Amazon deal. Let’s unpack it.
By the Numbers: A Record-Smashing Year
First, the headline stats – and they’re colossal:
- Revenue: £617.5m (up 17.5% year-on-year)
- Core Revenue (miniatures & direct sales): £565m (up 14.2%)
- Licensing Revenue (royalties/IP deals): £52.5m (up a staggering 69.4%)
- Operating Profit: £261.3m (up 29.5%)
- Profit Before Tax: £262.8m (up 29.5%)
- Dividends: 520p per share declared and paid (up from 420p last year)
CEO Kevin Rountree called it a “cracking performance” – an understatement, frankly. The core business is firing on all cylinders, but the real rocket fuel? Licensing. That £52.5m isn’t just numbers; it’s validation of their IP-first strategy.
What Drove the Licensing Surge?
Two words: Space Marine 2. The video game (a console title, significantly) smashed expectations, exposing Warhammer 40,000 to a massive new audience. But it’s not alone:
- 81% of licensing revenue came from PC/console games.
- Strong performances from legacy titles and new mobile games.
- Cash received from licensees jumped to £57m (from £25m last year).
The kicker? Management admits this level will be “very difficult to match next year.” Enjoy the peak while it lasts.
The Amazon Elephant in the Room
Buried in the licensing section is the update everyone’s been waiting for:
- Deal Status: The Amazon partnership for Warhammer 40,000 films/series is progressing “in line with our contractual agreement.”
- The Catch: “This same contract prohibits us from sharing any specific details or commercial terms.” (Classic Amazon NDAs).
- Timeline Reality Check: “There won’t be any significant news in the short term – these things take several years to bring to market.”
However, a tasty appetiser arrived: a well-received Warhammer 40,000 episode in Amazon Prime’s anthology series Secret Level. Proof of concept? Absolutely.
The key takeaway? This isn’t vapourware. It’s happening. Slowly. Deliberately. Amazon is committed to presenting Warhammer “authentically and at the scope and scale befitting our fantastical setting.” Patience, hobbyists. Patience, investors.
Core Business: Still the Engine Room
While licensing dazzles, the core miniature business remains a beast:
- Trade Channel (Independent Retailers): Up 19.9% to £345.7m. Now 61% of core revenue. They added 900 new stockists globally (total: 8,100).
- Retail Stores: Up 11.3% to £128.7m. Opened 30 new stores (net +22), taking the total to 570 globally. North America (+14.6%) and Continental Europe (+13.5%) shone.
- Online: Essentially flat (£90.6m), but digital sales (Warhammer+ etc.) grew strongly. “My Warhammer” active users surged to 735,000 (from 565,000).
Vertical integration is their superpower: designing, manufacturing, and distributing entirely from Nottingham (79% of core sales are ex-UK). They’re even expanding factories (F4 under construction) and opened a new Australian warehouse. This isn’t just growth; it’s meticulously engineered scaling.
Storm Clouds on the Horizon? Challenges Acknowledged
No triumph is without its potential setbacks. Management is refreshingly candid about risks:
- Tariffs: A potential £12m hit to 2025/26 profit before tax. Mitigation plans focus on efficiencies and RRP increases (averaging 5% this year). “Business as usual… a new normal has to be accepted.”
- IT System Overhaul: The critical “Systems Improvement Programme” is running slightly late (now forecast completion 2028/29). Legacy systems creak on.
- Supply Chain Disruption: Highlighted as a principal risk due to global conflicts.
- People Risk: Reiterated strongly. “Our biggest risk is the people we employ… leaders who truly understand not only what we do, but why we do it that way.” Succession planning is a key focus.
Outlook: “Exciting Times” (And More Dividends)
Rountree’s sign-off? “Exciting times.” The priorities for 2025/26 are familiar but potent:
- Growth: Target ~35 new stores (North America, Europe, Asia), including first store in South Korea. More Trade accounts.
- Customer Focus: Deeper localisation (language, marketing), leveraging My Warhammer.
- Licensing: Full steam ahead supporting Amazon and signing new “significant” deals (especially for Age of Sigmar).
- Cash Returns: The dividend policy (surplus cash after maintaining an £85m buffer) remains sacrosanct. Expect more chunky payouts.
The core strategy is unchanged: make the best miniatures, engage customers globally, exploit the IP wisely, and generate cash. Simple? Yes. Easy to execute? Clearly not – but Games Workshop is making it look effortless.
The Takeaway: A Hobby Empire Built to Last
Games Workshop isn’t just having a moment; it’s executing a masterclass in vertical integration and IP monetisation. The Amazon deal is a slow burn, but its progress is concrete. Licensing revenue, while potentially peaking, proves the value of the Warhammer universes beyond the tabletop. And the core business? It’s a cash-generating machine, meticulously managed and globally scalable.
Rountree & Co. acknowledge challenges (tariffs, IT, people) without flinching. Their focus remains ruthlessly long-term. For investors, the combination of explosive growth, robust cash generation, iconic IP, and a shareholder-friendly dividend policy remains compelling. The Warhammer world is expanding – on tabletops, on screens, and on balance sheets. Paintbrushes at the ready.
