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Game Group PLC (GMG)

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Wednesday 08 December, 2010

Game Group PLC

Interim Management Statement

RNS Number : 5541X
Game Group PLC
08 December 2010
 



 

8TH December, 2010

 

 

GAME GROUP PLC ("GAME")

INTERIM MANAGEMENT STATEMENT

 

 

The GAME Group plc ("GAME"), the leading European retailer of pc and video games products, today issues its Interim Management Statement relating to the period to 4 December 2010.

 

Trading Update 

 

Peter Lewis, the Chairman of GAME, said:

 

"We have been encouraged by the like for like sales trends we have seen since the half year. The difficult market has benefited from a strong launch schedule of new software titles and peripherals, and we have remained committed to our focus on market share.

 

For the 44 weeks to 4 December 2010, total Group sales were down by 8.8%. Like for like (lfl) Group sales for the same period were -7.9%. In the UK and Ireland, total sales were -14.7% and lfl sales were -12.2%. In our International business, total sales were up 1.2% and lfl sales were -1.5%. Our Online operations held firm with sales up 0.1%.

 

For the 18 weeks to 4 December 2010, total Group sales were down by 7.8%. Group lfl sales for the same period were -4.6%. In the UK and Ireland, total sales were -11.1% and lfl sales were -7.6%. In our International business, total sales were -2.4% and lfl sales were up 0.5%. Online sales were -1.4%.

 

We have maintained our leading market share, including for the two key titles in the period, Call of Duty: Black Ops and FIFA 11, which have both broken industry records as the fastest selling games of all time(1).  We were able to achieve this by leveraging all of our specialist qualities: a huge range of products, knowledgeable employees, close supplier relationships, an unrivalled CRM programme, compelling value offers and exclusive extras.

 

As Microsoft's lead partner in Europe for Kinect(2), we took a very strong market share of the product in each of our territories.  The success of this launch for GAME demonstrates both the strength of our relationship with suppliers and the importance of a specialist multi channel retailer to showcase innovative new technology.

 

All of our territories remain very competitive, with numerous retailers eager to access a market that generates over $40bn of revenues globally.  In order to deliver the lfl performance we have outlined today and to maintain our market share, we have continued to pursue a value proposition. We offer customers prime trade-in deals and preowned products, attractive bundles on mint products, and a wide range of exclusive promotions with our loyalty cards. These activities are integral to our strategy of continuing to build our customer base, and will continue through the Christmas trading period.  A consequence is that we now anticipate margins will be down by between 160 and 190 basis points on the prior year.

 

As a key element of our value offer, preowned sales continue to grow as increasing numbers of customers realise the value that it offers.  It will now represent approximately 25% of our sales mix (2009: 21%) over the full year.

 

We have maintained our focus on cost control, working capital management and capital expenditure.  As previously noted, we expect to make £7m of operating cost savings this year and we expect capital expenditure to be around £18m (2009: £30m).

 

Programmes to drive better performance in France and Australia are on track and we are seeing improvements as each business grows its market share.  To help optimise performance in Australia we have closed 25 underperforming stores, giving us a portfolio of 95 outlets in key locations.  In line with previous statements, the operational changes in France and Australia will result in non-recurring costs of £10m to £12m in the current financial year.

 

We are operating from 1,319 stores as we approach Christmas (see table below).

 

We also continue to progress our multi-channel proposition. A new IT platform which connects our businesses across all distribution channels is now in place and we expect to see the full benefit of this next year.

 

Outlook

 

As we enter the key Christmas period, we have seen some positive indicators in the market. Strong and innovative products are launching well, there is a record installed base of consoles in each of our territories(3), and customers are responding positively to our specialist offer.  However, the ongoing weakness in the market performance of hardware and casual gamer products means that we are maintaining our cautious outlook for the remainder of the current financial year.  Our most significant weeks are still ahead of us, historically representing over 25% of our annual revenues, and every part of our business is primed to deliver everything our customers need.

 

- ends -

 

Notes:

 

1. On 1 October 2010, FIFA 11 sold 684k units in the first 24 hours - making it the second fastest selling video game in UK history. Then on 9 November 2010, Call of Duty: Black Ops sold 1.4m units in the UK market in the first 24 hours - breaking a new record as the fastest selling video game in UK history (Total UK market estimates; copyright UKIE / Compiled by GfK-Chart-Track).

 

2. Kinect for Xbox 360 is Microsoft's motion sensing peripheral. On 29 November Microsoft announced global sales of 2.5m units in the 25 days since launch (Source: Microsoft).

 

3. UK Installed base:


6/12/2008

5/12/2009

4/12/2010

Number of 3rd generation consoles:

20.4m

27.2m

32.4m

Year to date hardware revenues

(1 Feb to 4 Dec)

+16%

-32%

-26%

(Copyright GfK Chart-Track)

 

Store portfolio:

 

 
4 December 2010
31 July 2010
31 January 2010
 
Number
Number
Number
Company owned and concessions
 
 
 
UK and Ireland:
641
635
677
- GAME - stores
382
382
390
- GAME - concessions
12
6
33
- Gamestation
247
247
254
 
 
 
 
France
197
198
199
Iberia
287
287
283
Scandinavia
68
68
68
Czech Republic
31
31
29
Total Continental Europe
583
584
579
Australia
94
118
118
Total International
677
702
697
Total owned and concessions
1318
1337
1374
Franchises
 
 
 
France
0
0
0
Iberia
0
0
5
Australia
1
1
1
Czech Republic
0
0
0
Total franchises
1
1
6
Total operational outlets
1319
1338
1380
 

 

 

Enquiries:

 

The GAME Group plc:

+44 (0)1256 784566

Ian Shepherd,  Group Chief Executive

Ben White, Group Finance Director

Simon Soffe, Investor Relations and Group Communications Director


Brunswick:

+44 (0)20 7404 5959

Jonathan Glass, Wendel Verbeek, Oliver Hughes


 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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