Game: Sales improve over all important Christmas period
Video games retailer Game Digital said sales trends improved over the important Christmas trading period and reiterated its outlook for first-half profit.
The retailer said gross transaction value, which reflects full sales excluding taxes and other deductions, was down 0.4 per cent in the three week period ended January 9.
However, the fall was not as big compared with a 6.7 per cent drop in the first 21 weeks of the full-year.
Martyn Gibbs, chief executive of Game Digital, said: “As outlined in our previous trading update, recent trading conditions in the UK video games market have been challenging, impacting Game UK’s peak trading performance.
“However, we have seen a better market and an improved sales trend over the last three weeks. The strong performance in Spain in the first 21 weeks of the year has also continued over our most recent trading period.”
Gross transaction value rose 10.6 per cent in its Spanish business but fell by 5.9 per cent in the UK for the three weeks from 20 December 2015 to 9 January 2016.
For the 24 weeks from 26 July 2015 to 9 January 2016 gross transaction value fell 10.5 per cent in it’s UK retail division, while in Spain there was a rise of 8.8 per cent.
Mr Gibbs added: “We are committed to taking appropriate actions to respond to the market challenges that we face in the UK market.
“Alongside pursuing commercial developments we are focused on driving further operational efficiencies and the group has already begun to implement a series of initiatives to deliver an improvement in the profitability of our UK business.”
Analysts at Peel Hunt estimate the three week period accounted for about 20 per cent of the group’s first-half profit as they left their full-year profit forecasts unchanged.
Game last month said it expected adjusted earnings before interest, tax, depreciation and amortisation to drop to about £30m for the 26 weeks ending January 23.
The profit warning came on the back of challenging trading conditions and disappointing sales at the start of school Christmas holidays.
At the time, Mr Gibbs said: “The switch-over from the older gaming formats to PlayStation 4 and Xbox One software has impacted profitability across the UK market.
“The extent of the impact of this switch-over has only become apparent in December which has been compounded by lower yearon-year high street and shopping centre footfall.”
But Mr Gibbs said that Game Retail UK had recruited a significant numbers of new customers through sales of hardware and content.
Looking forward, Game said, it sees a solid schedule of new games releases planned during the second half of its financial year.
“We also anticipate that new technology releases this year, in particular the launch of Virtual Reality devices, will lead to increased consumer interest which will benefit Game as customers seek expert advice and specialist service,” added Mr Gibbs.
The video game retailer has 321 stores in the UK and 236 outlets in Spain, In Yorkshire it has 19 stores and employs 133 permanent staff in the region.
Game was rescued from bankruptcy in 2012. Then called Game Group, the firm was one of the high profile high street collapses following the financial crisis.
Administrators closed 277 of its 610 stores and it was then bought out of administration in April 2012 by OpCapita, an investment firm working for Elliott Advisors.
Elliott, which has retained a significant stake in the business, has since revamped and refocused the chain.