Shares in retailer GAME Digital have dropped around seven per cent this morning after yet more warnings of challenging market conditions.
Similar warnings were issued last Christmas.
GAME has for the 53 weeks ending July 23rd reported a 10.8 per cent decline in UK sales. Overall group sales were down five per cent. More positive was the Spanish performance, where sales rose 12.4 per cent.
The company's share price has fallen sharply this year. Before Christmas it was trading at over 200p, but by the end of last month this had fallen to around 70p. It had recovered to around 80p by the beginning of this week but has this morning fallen to below 70p once again.
Consoles and pre-owned game sales were both down for the period, while accessories, toys-to-life and pre-owned tech were up – the latter quite sharply, climbing 65.1 per cent. Digital content sales were up 15.5 per cent.
GAME has also secured a new lending facility, replacing the one that was effectively set up by partner companies in April. It says that four and a half year 75m agreement with PNC and Wells Fargo will be used for UK activities, adding that it provides greater stock purchasing flexibility” and can also be used to finance outstanding receivables from concession partners”.
It adds that it does not expect to draw from the reserves in the next 12 months for normal working capital purposes but could be used to support future peak season working capital needs or help fund significant new hardware launches or new game releases if required”.
It also says that it has improved its supplier trading agreements, reduced distribution and operational cost and cut property costs by negotiating new leases.
Of its UK business GAME says it is structured and resourced to drive future growth opportunities and realise savings in areas of the business that are expected to continue to experience future declines”. GAME describes its plans for the company as intended to transition the business from one predominantly selling products to one selling both products and services to its customers”.
While encouraged by the new hardware that lies ahead in the form of Xbox One S, PlayStation VR, NX and Oculus Rift, it adds that it retains a cautious outlook.
We continue to focus our efforts on maximising the potential of our core retail markets; driving operational improvements and efficiencies across the business; and developing our broader consumer and enterprise gaming services to support deeper engagement with our customers, communities and supplier partners,” CEO Martyn Gibbs stated.
Next year will see several significant industry developments, with new console launches, the arrival of new ground-breaking virtual reality devices, as well as continued strong growth in competitive and social gaming. We are well positioned to benefit from these exciting developments and have clear plans in place to drive our retail businesses forward whilst developing our strategic initiatives to support future growth.”