Sales dip, but GAME is resilient

GAME has issued its annual post-Christmas trading update this morning – and it looks like the UK retailer bore the brunt of the local market’s dip in sales.

Sales for the five weeks ending January 9th were down by 12.1 per cent across the whole group, while group like-for-like sales were down by 13.8 per cent.

Total sales for the UK and Ireland decreased by 18 per cent, with lfl sales down by 17.5 per cent – while sales for its International stores actually increased by 0.9 per cent with like for like sales down by 5.9 per cent on a constant currency basis.

That means for the 49 week period to January 9th, total Group sales decreased by 11.1 per cent while Group like-for-like sales were down by 14.8 per cent.

GAME’s total sales for the UK and Ireland decreased by 15.1 per cent, with like-for-like sales down by 16.8 per cent – while total sales for International decreased by 1.3 per cent with like for like sales down by 10.2 per cent on a constant currency basis.

However GAME, which operates both the GAME and GameStation chains, describes its performance as ‘resilient’, pointing out its sales suffer when compared to the strong software market in 2008. And despite the like-for-like drops, the firm pointed it was still on track to make between 87m and 93m profit – the second-best profit performance in the group’s history.

Said the firm’s statement: "In the UK, the PC and video games market declined by 24 per cent in 2009 compared to a prior year that enjoyed unprecedented demand for hardware and exceptional launches of new peripherals and software.

"Much of the decline is due to a fall in revenues from the Nintendo formats. The International markets in which we operate have seen similar declines, although the impact from the Nintendo formats has been less significant.

"In an extremely challenging market, the Group has delivered a resilient performance. This is a testament to our specialist proposition, which delivers a market leading multi-channel offer for our customers. This includes competitively priced bundle deals, exclusive products, compelling trade-in offers and a value driven preowned programme, all supported by our exceptional teams and Reward Card."

Peter Lewis, chairman of the GAME Group, commented: The negative trends in the PC and video games market, outlined in our previous trading statement, continued over the key Christmas selling period despite strong software releases and a sizeable installed base of hardware.

"This, combined with the strong comparative period and the impact of customers shopping later, resulted in like for like sales declines of 13.8% for the Group over the last five weeks. Since Christmas, however, we have seen significant improvement as customers have responded well to our mint and preowned sales offers and the release of new software."

He added that over the next 12 months the arrival for new interfaces and peripherals – presumably the likes of Sony’s Motion Controller, Project Natal and the Wii Vitality Sensor – will mean the opportunity to exploit ‘an unprecedented installed base’.

"In 2010/11 we expect the video games market to continue moving towards higher margin software and new peripheral technology, to supply an unprecedented installed base of consoles in the market," he said.

"The Board remains mindful of the uncertain macro-economic environment and the trends in the PC and video games market. This combination of factors means that revenues are likely to decline year on year but our sales mix will continue to move towards higher margin new and preowned products.

"We anticipate that the new technology in 2010/11 will lead to increased consumer choice and benefit GAME as customers seek expert advice and specialist service. We believe that this, together with additional hardware pricing activity, will continue to stimulate the market before we transition to the next growth phase of the video games market and our business.”