Game Digital putting hopes in e-sports and live gaming events after sales drop
Embattled retailer Game Digital said it hoped a new e-sports venture and the launch of virtual reality gaming will help turn its fortunes around after seeing sales slide.
The video games chain, which has 313 stores across Britain and 267 in Spain, saw UK sales by gross transaction value plunge 10.8% in the 52 weeks to July 23 and warned challenging trading had continued throughout its second half.
Game said it delivered a better performance across Spain, where sales rose 12.4%, leaving overall group sales 5% lower.
Group revenues are expected to drop to around £815 million for the 53 weeks to July 30 from £866.6 million a year earlier.
The group said earnings were still expected to be in line with market forecasts, but shares dropped 6% as analysts pencilled in profits at the lower end of expectations after the trading update.
Game is leading an overhaul to offset tough trading and hopes a push into new areas, such as e-sports and live gaming events, will transform the group.
It said its e-gaming plans were gathering pace, with a number of trials launched in the UK including both in-store and locally-based activities.
Game opened its first new in-store "gaming zone" concept in the Trafford Centre store in Manchester last month.
The group is also looking to a boost from a strong line-up of products, including highly-anticipated new virtual reality system launches - PlayStation VR and Oculus Rift - expected within the next year.
Martyn Gibbs, chief executive of Game, said: "Next year will see several significant industry developments, with new console launches, the arrival of new ground-breaking virtual reality devices, as well as continued strong growth in competitive and social gaming."
But the group said it still had a "cautious sales outlook" for the year ahead.
Canaccord Genuity analysts said the challenging second-half trading conditions would likely see underlying earnings at the lower end of market forecasts.
They added: " A soft pipeline of new games through its second half, combined with the inevitable impact of poor weather reducing high street footfall, have provided a challenging backdrop for Game."
Game warned over profits just before Christmas Eve after dire festive trading, when sales of old-format games for PlayStation 3 and Xbox 360 consoles plunged, while sales of games consoles were also sharply lower.
It agreed a £100 million loan in April from a subsidiary of US hedge fund Elliott Associates, following a review into its banking arrangements.
Elliott holds a major stake in the group.
Game was bought out of administration in April 2012 by OpCapita, an investment firm working for Elliott.