UK Retailer Game Group Sees Losses Increase

Officials from biggest UK-based specialty video game retailer GAME have announced the company’s interim results for the six months ended July 31st, reporting an increased loss, from £3.6 million ($6.4m) the previous year to £10.3 million ($18.2m) - with an overall loss before tax of £14.7 million ($25.9m), compared to just £3.5 million ($6.2m) in 2004. Attempting to explain these issues, representatives for the group have continued to describe 2005 as a “transitional year”, not only for the video game industry at large, but also for the company, which is continuing to open a large number of new stores in continental Europe. As a result of the large number of new stores, group turnover for the company rose from £213.0 million ($376.1m) last year to £220.8 million ($389.9m), although like-for-like turnover fell by 5.4 percent. Unfortunately, though, gross margin dropped from 30.3 percent to 28.9 percent, as the company’s operating losses increased. The company has blamed the relatively weak performance on a paucity of new releases in the first half of the year, and a generally difficult retail environment. Although this is a commonly cited problem for retailers, it should be noted that the UK release schedules were unusually barren in the first few months of 2005, with some larger titles being delayed for months beyond their U.S. releases. Nonetheless, much is expected from the Christmas sales period, and the group now has over 295 outlets (including franchise stores) in continental Europe and 410 stores in the United Kingdom - all ready to take advantage of forthcoming prominent releases, as well as the launch of the Xbox 360. "The benefits of our investment [in new store openings] will come through beginning in 2006 with a steady supply of the Sony PSP, Microsoft Xbox 360, the first next generation console which launches in December 2005, then the Sony PlayStation 3 and Nintendo Revolution set to follow," said group chairman Peter Lewis. "These new platforms will greatly increase demand for video games and the board's confidence in the group's future is reinforced by the decision to increase the interim dividend by 15 percent."