Console sales fall but Game profits up
Retailer Game Digital saw sales of the new generation of consoles tumble in the second half of the year but still maintained its annual forecast is on track after it was boosted by the popularity of newly-released games.
The video games business said revenues from the new Xbox One and PlayStation 4 consoles fell, after their initial launch, in its final six months of the year with average prices dropping 19%.
However, the group, which has stores in the UK and Spain, said due to a strong performance in other product areas its gross transaction value for the 52 weeks to July 25 lifted 2.3% to £960m, compared to the year before.
It added it expects its adjusted earnings to be in line with forecasts, helping send shares up 2%.
The retailer said it sold a larger mix of high margin software and accessories to accompany the Xbox One and PlayStation 4, which lifted gross profit by 9% in the second half of the year.
The group said it expected the market next year to be similar to the last six months, with higher margin software and accessories servicing the new consoles.
Chief executive Martyn Gibbs said: "The group traded well throughout the second half, with a strong performance on new release titles and pre-owned technology products contributing to a 9% year-on-year increase in second-half margin delivery.
"We are confident that our strategy of focusing on the recruitment and retention of Xbox One and PlayStation 4 owners across our two major territories provides a solid foundation from which to drive growth."
In March the firm posted a 1.8% fall in pre-tax profits to £33.2m for the 26 weeks to January 25, after an earlier profit warning following poor Black Friday sales.
Brokers at Liberum said: "As the initial flurry of excitement in the new console cycle abates the real driver of group profit, content rather than hardware, is now coming to the fore."