GAME posts strong H2 despite hardware decline

GAME has increased its gross margins for the second half of its financial year

As a result, it expects its full year financials to fall in line with expectations.

GAME says it has improved its margins and is enjoying a profitable period, despite a decline in hardware revenues. Sales of PS4 and Xbox One has declined after an initial surge, the company says. The machines are also selling at a reduced price than before, further impacting the revenue figures. Hardware revenue has fallen 19 per cent, while revenues excluding hardware has increased seven per cent in the second half.

Sales of digital games increased 16 per cent as the firm attempts to move further into the digital market.

Due to the success of higher margin products this half of the year versus the lower margin consoles, the firm has improved its overall margins by 200 basis points, which helped increase gross profit by nine per cent.

The company claims to hold a 33 per cent of the total share of the UK games market.

Going forward, GAME expects to manage falling hardware sales with increased software, digital and pre-owned sales.

In terms of growing business areas, the firm says it holds 60m in cash, now has 550,000 customers signed up to GAME Wallet, and they now have 1.5m registered GAME app users.

The Group traded well throughout the second half, with a strong performance on new release titles and pre-owned technology products contributing to a nine per cent year-on-year increase in H2 margin delivery,” said CEO Martyn Gibbs. :We are confident that our strategy of focusing on the recruitment and retention of Xbox One and PlayStation 4 owners across our two major territories provides a solid foundation from which to drive growth over the medium term.

We have made good progress on our customer and community engagement and strategic priorities over the year. Our ambition to broaden our offer beyond purely retail, to the places and ways in which our customers play games is moving forward at pace, with continued support from our supplier partners. Combined with a clear focus on retail growth opportunities and further investment into strategically important areas, the business is positioned well for the future. I am particularly pleased with how the incorporation of Multiplay into the Group has progressed and how the team is setting the path for the future.

Our preparations for this year’s peak trading season are already well advanced. The line-up of new physical and digital games launches in the coming months looks very strong and our pre-order rates on the major titles are encouraging, supported by our excellent range of exclusives.”