Game pins hopes on Christmas lift after tough year
Computer and video games retailer Game, which has around 10 stores in Northern Ireland, is pinning its hopes on a decent Christmas after reporting a jump in half-year losses.
Game blamed a combination of a cyclical low point for the games sector, as new hardware is developed, and the tough economic backdrop as sales slumped by 10.5% to £558.8m in the six months to July 31. Losses soared to £51.5m from £21.5m as margins also came under pressure after it invested heavily in promotions to get sales moving.
Sales in the second half weakened further, with like-for-like revenues for the 34 weeks to September 24 down by 10.4%, but the group hopes a new batch of top-ranked game releases in the run-up to Christmas can still turn things around as the group makes 40% of its revenues over the next 10-week period. Potential bestsellers include football stalwart FIFA 12, war game classic Call of Duty: Modern Warfare 3, and stealth game Assassin's Creed Revelations.
Chief executive Ian Shepherd said trading conditions will remain "tough" but added the group is determined to outperform the market over the rest of the year.
Directors of the group, which has 615 stores in the UK and Ireland, have committed themselves to the recovery by agreeing to spend at least 20% of their salary and fees to buy shares over the next 12 months.
Mr Shepherd said to meet revenues and margin targets, Game will need to achieve year-on-year revenue growth in the second half and a better gross margin than the first half, but conceded this will be challenging.
"The current shape of both the wider economy and the PC and video games market leaves us under no illusion about the challenges we face in the remainder of the year," he added.
For the full year, the group forecasts revenues will recover to a fall of between zero and 3% over the previous year, while margins should recover slightly with cost savings of between £6m and £9m.
The forecasts are based on an uplift in the market overall after a first-half contraction of 15.5%. Pre-orders for Christmas are encouraging, said Mr Shepherd.
Kate Calvert, an analyst at broker Seymour Pierce, said while Game has secured a record 18 special editions on the expected top 20 software titles this Christmas, supermarkets will be very aggressive on prices of basic versions.