GAME Digital is reporting "solid sales and margin performance in a challenging trading climate" as it shares an update on trading for the seven and 23 weeks ending January 5th, 2019.
Group like-for-like sales were up 2 per cent during the seven-week Christmas trading period to January 5th, and 1 per cent in the first 23 weeks, whereas like-for-like sales across the UK retail sector as a whole were +1.1 per cent for the 23 weeks, and broadly flat over the seven-week period. However, overall group sales were down 0.5 per cent over the same seven weeks, and down 0.6 per cent over the first 23 trading weeks of the financial year.
The company acknowledged that "preowned remained challenging over the period", but said that due to "exceptional working capital management", it was able to deliver improved cash of £96 million at January 5th 2019 (in comparison to £89 million at January 6th, 2018).
Strategically, the company has identified three "key pillars" to provide the "most valuable community for gamers"; improving the core specialist retail offering, expanding the Group’s live gaming services, and optimising the organisation to deliver efficiencies. The former will see the continued expansion of its "exclusive proposition across new software releases" which it sees as having contributed to the Group’s margin performance, while the latter will ensure the company "remains in active property negotiations across its estate" and "facilitate the reshaping of [its] estate, fixed cost base and the rollout of Belong arenas".
Expanding GAME's live gaming services will see two new Belong arenas opened during the first 23 weeks of this year, and GAME Digital remains focused on identifying new and larger locations for future rollout. It also made reference to continued progress made with "the Belong proposition driven by pay to play growth" and sees "significant work completed on Belong customer profiles to inform future arena development and competitive gaming tournaments".
"Despite a challenging retail climate, the Group traded solidly over the Christmas period, with encouraging like for like sales in both [UK and Spain]," said Martyn Gibbs, GAME Digital CEO. "The Group successfully delivered growth from exclusives, higher margin categories and our specialist customer offer over the Black Friday event, which all contributed to a pleasing margin outcome and helped to offset the continued, managed decline of preowned."
"Our multichannel focus has delivered both trading margin growth and cost savings, while paid for services, such as multiple delivery options, have been well received by customers. Our supplier partners provided a strong line-up of exclusive content for key software releases over the 23 weeks and customer response and sales have been positive.
“The cost transformation programme enacted two years ago in the UK has gathered pace, enabling the Group to respond well to market changes and the economic uncertainty. We are working closely with landlords to manage down the fixed costs of operating our store portfolio and produce ongoing efficiencies.
“I would like to thank our colleagues across the UK and Spain who continue to work exceptionally hard to deliver great customer service over this important trading period."
The Group will announce its half-year results in March 2019.