GAME downgrades full year revenue target

The GAME Group has admitted that the 2011 video games market has performed below its expectations”.

The retailer had previously predicted a full year like-for-like sales decline of between -3 per cent and flat. It now expects a best-case scenario of -7 per cent which, as the retailer now routinely highlights, is still over-performing the overall market”.

Overall GAME Group reported a sales decline of 10.6 per cent for the 41 weeks ending November 12th. Like-for-like sales were down 8.6 per cent. In the UK and Ireland overall sales fell 13 per cent and like-for-like sales dropped by 10.5 per cent.

Revenues were down across every category.

It reckons, however, that those numbers are ahead of the total UK games market which it states has declined 12.3 per cent year-on-year.

Major software titles are launching in line with first week expectations, but are then seeing a quicker tail-off than historically experienced,” GAME’s statement read.

Customer footfall and basket sizes are down reflecting wider consumer uncertainty.”

More positive was the doubling of online margins since the launch of its new website, though its online market share has remained static at 19 per cent. Even more impressively, digital sales have rocketed by 40 per cent.

Pre-owned now accounts for 28 per cent of the Group’s overall sales.

The overall video games market remains very challenging, despite strong title launches, and our guidance today reflects the extraordinary economic times in which we are operating,” CEO Ian Shepherd stated.

GAME has outperformed the market, reinforcing our position as market leader, and I am hugely proud of our teams. They remain focussed on delivering our strategy, controlling costs and driving operational cashflow, and we remain well placed to benefit in the medium term both from the next console cycle and the growth in digital and social gaming.”

Throughout the period GAME has welcomed 2.3m new customers to its loyalty programme, leading to a total membership base of 19.3m.

GAME continues to focus on delivering a further improvement in operating cash generation through strong working capital management, tight cost control and capital expenditure discipline,” it added.

Combined with a robust balance sheet and available banking facilities, this means that the Group is well positioned for these difficult market conditions.”

37 stores have closed this year – in line with previous targets. GAME hopes for an overall footfall increase of one per cent for the full year.

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