UK Retailer Game Group Posts Declines In Profits, Sales

Author: by Mike Rose, Kris Graft

UK-based specialty video game retailer Game Group reported a drop in sales and profits for the full fiscal year ended January 31, but the results were still in line with market expectations, boosting shares. Like other video game retailers, Game is struggling to adjust to emerging business models that are based on digital sales rather than physical. "Game is on a journey" CEO Ian Shepherd said. "Our customers have new and different ways to buy and play video games and we need to make sure our business provides everything they want, wherever they want it." He added, "We are operating, however, in a very challenging economic climate and have a lot to do and a long way to go if we want to outperform the market by growing new revenue streams." Total revenue for the year was £1.63 billion ($2.7 billion), down 8.3 percent year-on-year. Annual revenue specifically for stores open for over a year was down 6.7 percent, compared to an aggregated market decline of 9.9 percent. Preowned, digital and own-label (Game-branded products) revenues each increased during the year. Sales of preowned items were up 3.3 percent to £386.9 million ($640.36 million), and digital revenue increased by 27 percent to £41 million ($67.84 million). Own-label revenues were up by 36 percent to £29 million ($47.99 million). Pre-tax profits for Game were £23.1 million ($38.22 million), an 84.2 percent year-on-year drop. Shepherd added the company is encouraged by "good evidence that we can grow our online, digital, own-label and preowned businesses strongly." Despite the drops in sales and profits, shares of the company saw a 13 percent boost Wednesday to £51.25 ($84.79) per share.