Adjusted profits slip at GAME but new stores on the way

GAME saw a 4.5 per cent dip in pre-tax adjusted profit in the last financial year.

The final number reached 38m, down from the 39.8m in the previous year. Adjusted EBITDA earning fell 8.6 per cent to 46.9m.

Group revenue was up 0.6 per cent at 866.6m, however, with UK revenue up 1.7 per cent at 655.9m. Gross transactional value climbed 2.3 per cent to 962.4m, with the UK climbing 3.6 per cent to 733.2m.

Chairman David Hamid said the chain’s peak period period was impacted by significant promotional activity, most notably on consoles”.

The strongest growth was seen in GAMEtronics, with mobile phone and tablet sales up 100 per cent, with the amount of stock ordered from third parties increased. High margin sectors such as pre-owned, accessories and toys-to-life helped offset the decreased hardware margins (whose average selling price fell 5.4 per cent) that have resulted from softening next-gen console sales.

Revenues excluding hardware were up 3.3 per cent year-on-year. In 2015 GAME has secured exclusive editions of 25 new game releases.

The company maintained its UK market share of 33 per cent, with the addition of 44 GameStop stores helping its Spanish share to climb three per cent. It also has a 66 per cent share of the retail digital console content sector. In the UK over two thirds of PS4 and Xbox One customers have bought digital content from GAME, totalling over 1.5m customers. That’s up 19 per cent year-on-year.

Last year the UK saw two new store openings, two relocations and four closures. In the year ahead GAME will continue to rationalise and optimise” its footprint and is looking to open a small number of new stores in attractive locations where we are under-represented”.

Added GAME: We are also planning on trialling some new, larger formats in key locations to provide expanded areas for a wider range and more store events, increasing community interaction. These larger footprint stores are located in major regional shopping centres where we have either closed two stores in exchange for one larger unit or where our current store is too small.”

GAME finished the year with 319 UK stores and 275 Spanish outlets. None of its UK stores were loss making and only three loss makers in the UK.

Own-label accessories brand GAMEware will be re-launched in 2016, with more space being put aside for toys-to-life and PC gaming. Merchandise and collectables will also be getting more shelf space and room is already being put aside for next year’s VR launches.

The chain’s new Marketplace initiative, which allows third parties to sell items via its website, now has over 10,000 new products from over 100 vendors.

GAME had a strong second half to the year and delivered sales and profit growth for the full year as we capitalised on our leading positions in the fast-moving video games industry,” CEO Martyn Gibbs said.

As we expected, the market has developed as a result of the growing population of Xbox One and PlayStation 4 console owners which has created a positive environment for GAME. We have captured growth opportunities and grown sales of higher margin products to next generation console owners. At the same time we have delivered strong increases in sales of other higher margin categories such as pre-owned phones and tablets, driven our digital sales and expanded into eSports, gaming events and online games hosting with the acquisition of Multiplay.

Looking forward, with the growth opportunities available, particularly in Multiplay, we are committed to growing our businesses and increasing our investment in both capital projects and our operating cost base. We believe we are well prepared for Black Friday and the peak Christmas season, with a strong, specialist customer offer across all product categories.

GAME is a fantastic business, underpinned by passionate and knowledgeable colleagues, with a clear purpose: to build the most valuable community of gamers, and I remain excited in our future prospects.”