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Game Group PLC (GMG)

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Wednesday 16 November, 2011

Game Group PLC

Interim Management Statement

RNS Number : 1687S
Game Group PLC
16 November 2011
 



 

16 November 2011

 

                    The GAME Group plc: Interim Management Statement

 

Current trading below expectations; medium term strategy making progress

 

 

 

The GAME Group plc ("GAME" or "The Group") today issues its Interim Management Statement for the 41 week period to 12 November 2011.

 

 

Trading Update:

 

Total Group sales were down 10.6% and like for like (lfl) sales down 8.6%. This is ahead of the overall video games market, which was down 12.3% in the same period. The performance of the market is below our expectations.

 

Revenues across all categories: software, hardware, preowned and accessories are down year over year. Major software titles are launching in line with first week expectations, but are then seeing a quicker tail-off than historically experienced. Customer footfall and basket sizes are down reflecting wider consumer uncertainty. In the year to date UK and Ireland total store sales were -13.0% and lfl sales were -10.5%. International total store sales were -8.4% and lfl sales were -6.8%.  Ecommerce sales were flat.

 

In the 7 weeks since our last announcement, total Group sales were down 4.9% and lfl sales were down 2.9%.  GAME has retained a market leading share on all major software titles.

 

 

Full year expectations:

 

On 27 September 2011 the Board stated that the Group was targeting full year lfl revenues of -3% to 0%, over-performing the overall market; gross margins down 100bps; and operating costs £6m to £9m lower than the previous year.  The Board now expects that lfl revenues for the full year will be no better than -7%, still over-performing the overall market; gross margins will be down by at least 150 basis points; and operating costs will be £8 to £10 million lower than last year.

 

GAME continues to focus on delivering a further improvement in operating cash generation through strong working capital management, tight cost control and capital expenditure discipline.  Combined with a robust balance sheet and available banking facilities, this means that the Group is well positioned for these difficult market conditions.

 

 

Strategic Update and Outlook:

 

Despite the short term market challenges, the medium term strategy is making progress:

 

·      Multichannel:  Online margin has doubled since the launch of a new web platform, and online share has remained at 19%.

·      Right stores:  The store closure programme is on target, with a net 37 closures this year. Footfall conversion is on track to grow by 1% this year (currently 18.7% vs. 17.6% in Q3 2010).

·      Unique product range:  Group digital sales have grown over 40% in the year to date, as new initiatives have launched. GAME has released 15 exclusive editions of AAA software titles in the last 10 weeks, which have increased the Group's market share. Further exclusive editions will launch before Christmas.

·      Novel ways to buy:  Preowned is 28% of total sales at 40% margin. GAMEwallet, a new way for customers to find and pay for digital games, launched in October.

·      Strong customer relationships:  2.3 million new customers have joined the loyalty schemes this year, taking the total to 19.3 million.

 

 

Ian Shepherd, GAME CEO, said:

 

 "The overall video games market remains very challenging, despite strong title launches, and our guidance today reflects the extraordinary economic times in which we are operating. GAME has outperformed the market, reinforcing our position as market leader, and I am hugely proud of our teams. They remain focussed on delivering our strategy, controlling costs and driving operational cashflow, and we remain well placed to benefit in the medium term both from the next console cycle and the growth in digital and social gaming."

 

 

 

The Group will provide a Christmas trading update on 11 January 2012.

 

 

- ENDS -

 


1 November 2011


31 July 2011

31 January 2011


Number


Number

Number

Company owned and concessions





UK and Ireland:

610


615

639

- GAME - stores

369


369

381

- GAME - concessions

9


10

11

- Gamestation

232


236

247






France

194


195

197

Iberia

292


292

287

Scandinavia

57


62

65

Czech Republic

30


30

31

Total Continental Europe

573


579

580

Australia

92


92

93

Total International

665


671

673

Total owned and concessions

1,275


1,286

1,312

Franchises





Australia

1


1

1

Total franchises

1


1

1

Total operational outlets

1,276


1,287

1,313

 

Enquiries:

GAME Group plc

 

Simon Soffe, Communications & Investor Relations Director

+44 1256 784176




Brunswick  Group

Jonathan Glass

James Olley

Natalia Marisova

+44 207 404 5959




 


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