GAME warns on profit after disappointing sales
GAME Digital, the specialist video games retailer, has issued a first half profit warning after experiencing weaker than expected sales.
In the 21 weeks ended 19 December, total group gross transaction value dropped by 6.7% to £466.8 million. GAME said the fall was largely explained by a 20.3% reduction in low margin console sales.
Gross transaction value in the UK declined by 11.4% to £353.5 million with Black Friday weekend trading stronger than overall performance.
GAME’S board now expects adjusted EBITDA for the 26 weeks ending 23 January 2016 to be around £30 million. This compares to £43 million in the corresponding period last year.
Martyn Gibbs, GAME’s chief executive, said: "The trading conditions in the UK video games market have been challenging. The switch over from the older gaming formats to PlayStation 4 and Xbox One software has impacted profitability across the UK market. The extent of the impact of this switch over has only become apparent in December which has been compounded by lower year on year high street and shopping centre footfall.
“Whilst we are pleased with strong growth in our newer products, this has not been sufficient to offset the margin decline from sales of Xbox 360 and PlayStation 3 content and other old format software.”
GAME said it had seen a strong performance in Spain with gross transaction value rising by 8.1% to £109.7 million.
Gibbs added: " Despite the market challenges, GAME has continued to deliver significant growth from new format content and newer categories such as licensed merchandise and preowned mobile phones and tablets, and we continue to prioritise these areas as well as growing our Multiplay business.”
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