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Ken Wotton speaks to City Wire about Games Workshop

As a unique business with a new management team which has focused on demographics, Ken Wotton speaks to CityWire about his prediction for a Games Workshop recovery.

(Please note Livingbridge Equity Funds has been renamed Gresham House Equity Funds following the sale in November, click here for more information.)

‘It is a unique business that has done brilliantly over the last couple of years,' he says.

'It has been around for quite a long time, but they had some issues with over-expansion in terms of stores around the UK probably about four or five years ago.’

Since then, Ken explains there has been a change of management.




‘The current management team has really honed the business by focusing on their demographic, which is a combination of teenage and early twenties men, who are sort of discovering it for the first time, and late 40s to late 50s men, who probably discovered it 20 to 30 years ago.’

Investors have responded positively to the measures put in place by the new management team, with Games Workshop's share price up 102% over the past 12 months.

Ken and AAA-rated co-manager Brendan Gulston feel particularly positive about Games Workshop’s low capital expenditure. For example, its stores are typically not on the high street and tend to be 'destination stores', resulting in lower overheads.


Online threat

While some investors have concerns about Games Workshop's store-based model, Ken takes a different view.

'Long-term, does this sort of thing get superseded by online? Actually, it has not happened. There have been a number of years where that could have happened and it hasn't.’

In fact, looking ahead Ken believes Games Workshop's online presence can drive the business forward.

‘They have online community groups and they get a lot of feedback through the online channels about what is working and what is not,’ he explains.

The fund manager puts the company's strong performance down to its store rollout, particularly in the US.

Ken adds that Games Workshop has used data from its online proposition to better understand their customers before they launch a store.

‘If they want to go into Germany, for example, they already know where there are people who are enthusiastic about this product because they are already engaging with it online.’

This is why Ken believes there is huge growth potential for store rollouts across different countries.

‘It is not just a UK thing, it is an international community of people who are enthusiasts for the Warhammer game and therefore are prepared to pay what, to an average person, would be quite a large amount of money to buy these models,' he explains.

He adds that customers are willing to spend hundreds of pounds on buying a model to paint and to use in these games.

‘What they [Games Workshop] have tapped into is this international community of people who are hugely enthusiastic about the game and product.' 


No direct competitor

Ken notes that there is no direct competitor anywhere near the scale of the success of the Warhammer game.

‘It has been good earnings growth story. Their policy is to pay out any excess cash they generate as a dividend,’ he notes.


games worshop


This article was originally published on the 23rd August 2018 by City Wire