GAME’s profit and revenue fall during H1

GAME’s earnings were down by almost 10m for the half-year until January 23rd, 2016.

The firm cited the ‘challenging UK market’ for the slump in earnings, which totalled 33.1m. The figure is a slight improvement on the profit warning GAME issued in January, when it predicted that its half-year results would be ‘around 30m’.

The company’s Spanish business is performing more strongly, up 16.1 per cent.

There are multiple reasons for GAME’s slump in performance – the weaker-than-expected performance of games around Christmas being No.1, while hardware revenue has also declined as both Xbox One and PS4 priced were significantly reduced in 2015.

GAME says it is implementing actions following a UK business review in January, with the aim to increase profitability. The closure of its internal customer service department is part of this.

To manage the fall in revenue, GAME has slashed more than a third of its anticipated full-year dividend – the firm’s interim dividend per share now sits at 1.67 pence.

GAME was eager to point out that not everything was in decline. Accessories, toys-to-life and its Multiplay business grew by 25 per cent over the 26 week period, digital content rose nine per cent and pre-owned phone and tablets (also know as its GAMEtronics business) rose by 93 per cent.

The company also states that it now has over 3m users of its GAME App, a further 870,000 new customers signing up to its loyalty programme and an increase in online traffic of 5.7 per cent.

GAME says it is still looking to invest in the growing areas of its business, but will be making cuts to its retail side to fund it.

Martyn Gibbs, Chief Executive Officer, said in a statement: Operating in the fast-paced video games industry continues to present both opportunities and challenges to our business. Market dynamics in the UK were challenging during our peak trading period, although sales trends improved in the last week of December and first three weeks of January.

In January we launched a review of the UK business and are committed to rapidly implementing measures to respond to current market trends. As well as pursuing commercial opportunities we are focussed on driving improvements in the consumer proposition and realising operational efficiencies to improve our performance. In Spain the Group delivered another strong performance in the first half, with increased sales, profits and market share.

I remain confident in the prospects for the Group. We are making good progress driving retail and business diversification, with strong growth delivered in higher margin categories such as preowned phones and tablets, PC accessories and licensed merchandise. In addition, sales of digital content were up almost 10% and our customer engagement metrics remain positive. At the same time we expect the impact of falling legacy software sales to lessen in the future.

Increasing engagement with gaming communities and broadening our offer, both within and beyond retail, sits at the heart of our strategy. We are committed to investing in our teams and core foundations to support our plans for the business. The development of our competitive gaming, eSports and gaming events continue to progress rapidly at Multiplay, and we are looking to develop similar activities in Spain through the acquisition of SocialNAT. I also believe that the potential for Clanforge, our consumer and enterprise server management software, will continue to grow as we engage with our broad supplier base. I remain excited by our plans for the business and the opportunities ahead of us.”

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