How Games Workshop became the best performing UK share of the last two decades
Related
news
12 March 2026
How I invest: From trying to cover train fares to being a student of Buffett6 min readAuthor12 March 2026
Magnum’s meltdown: can Unilever’s ice cream spin-off recover from a bad start?6 min readAuthor
Shares Magazine
While most investors grapple with the potential impacts of generative artificial intelligence, Games Workshop, by contrast is a refreshingly simple business.
In fact, the company recently banned employees from using AI in content or designs. Games Workshop is the world’s largest maker of hobby miniatures with two major brands, Warhammer and Warhammer 40K. The company also holds the rights to the Lord of the Rings and Hobbit tabletop games.
The Nottingham-based company remains steadfastly focused on making the best quality miniatures and creating engaging fantasy worlds for its army of loyal customers across the globe to immerse themselves in hours of play.
Delivering on this vision has helped the shares climb in value to become one of the most successful UK companies on the stock market. On a 20-year view, according to figures from Sharescope, its annualised total return of 23.6% put its right at the top of the tree for all UK-listed companies. It is even handsomely ahead of the Nasdaq index of big US tech companies over this period.
The shares were promoted to the blue-chip FTSE 100 index in December 2024, after their market value topped £6 billion, a far cry from the £10 million price tag of the management-led buyout in 1991.
The shares floated on the London Stock Exchange in July 1994 at an IPO (initial public offering) price of 100p per share.
What are the secrets to Games Workshop’s success?
Games Workshop operates a vertically integrated business model, which means it controls the whole process from designing miniatures, manufacturing them, and selling them through a global chain of ‘Warhammer’ stores.
However, Games Workshop does not see itself as a retailer, because the Warhammer stores are seen as places where hobbyists meet fellow enthusiasts to discuss collecting, painting and play.
Word of mouth is an important part of how the business recruits more hobbyists. Perhaps uniquely among FTSE 100 companies Games Workshop does not do any advertising.
The company’s minimalist approach is encapsulated in the following quote from the annual report: “We don’t spend money on things we don’t need, like expensive offices or prime rent shopping locations or advertising that speaks to the mass market and not our small band of loyal followers.”
Virtual integration allows the business to keep nearly 70% of every pound it generates in sales as gross profit, a margin that most manufacturers can only dream of making.
The scale of the business brings an advantage which is difficult for smaller competitors to match, and customer loyalty creates a high barrier for competitors.
Games Workshop’s business model and market position allows it to raise prices without impacting sales volumes. For example, the company was able to put through 3.5% price rises in early 2026 to offset US tariffs.
The ability to raise prices is very powerful because increases drop straight through to profits without any associated costs.
The growing importance of intellectual property
For more than four decades Games Workshop has built a huge library of stories and characters.
A central plank of the firm’s strategy is to exploit the value of its intellectual property beyond core tabletop gaming into multiple categories.
In late 2024, Games Workshop inked a deal with Amazon Prime which will bring the Warhammer 40K brand to film and TV, with actor Henry Cavill serving as lead actor and executive producer.
It will take a few years for these projects to come to fruition, but the potential rewards are significant.
Analysts believe that a well-received Amazon series could add between $40 and $50 million in pure profit for Games Workshop.
Beyond licensing benefits analysts estimate that if only 1% of Amazon Prime’s global audience decide to buy a starter Warhammer set, it could generate hundreds of millions in new core tabletop revenues.
In 2025 the company saw particular success licensing video game adaptations, including Warhammer 40K: Space Marine 2, which sold seven million copies, becoming the fastest-selling game in the franchise’s history.
Licensing revenues are essentially 100% profit which allows Games Workshop to make money from people who don’t even play its tabletop games.
What is Games Workshop’s strategy?
The company states it has a simple strategy which is: “To make the best fantasy miniatures in the world, to engage and inspire our customers, and to sell our products globally at a profit”.
Games Workshop’s strategy is built on scarcity and obsession. An unnamed fund manager once commented, half-jokingly, that the biggest threat to the business is puberty.
The business went a though a digital transformation in 2015 after current CEO Kevin Rowntree took over the helm. The Warhammer+ subscription service was launched in 2021, which is a streaming platform offering animated series, painting tutorials, battle reports and apps for around $60 a year.
This strategy helps to keep enthusiasts engaged with the brands and has become an effective self-reinforcing marketing tool.
How do the financials look?
It shouldn’t be a surprise to learn that Games Workshop’s financial metrics stack up well against the average company.
The firm’s high gross margin and frugal approach towards spending on unnecessary items results in consistently high operating margins and high rates of return on equity.
Gross margin is the proportion of sales that a company keeps after paying for the direct costs of making a product. The more efficiently it can do this, the higher its gross margin.
Let’s say it costs Games Workshop £12 to make a basic set of miniatures, including buying all the raw materials, and each set is sold for £50. Sales minus cost of sales, or gross profit is £38 (50-12) and gross margin is 38/50, or 76%.
A high gross margin usually translates into a high operating margin, so it is not surprising that Games Workshop achieves operating margins between 38% to 40%.
While Games Workshop is a high-quality business, it also has a high percentage of fixed costs, which is a benefit to shareholders when sales are rising but a problem when sales fall.
The company relies on word of mouth and keeping customers satisfied so anything which alienates fans could hurt the business disproportionately.
Martin Gamble: Shares and Markets Writer
Martin Gamble is Shares and Markets writer at AJ Bell. He was previously the Education Editor of Shares Magazine. He has been with the business since 2019.
Martin graduated from the University of Kent in...
