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GAME Group Records Losses For First Half of 2010

Shares in UK-centric video game retailer GAME Group have plunged, following the announcement that the company has recorded a pre-tax loss of £21.5 million ($34 million) in the first half of 2010.
Shares in the UK-centric video game retailer GAME Group PLC fell following the announcement that the company plunged into losses in its results for the half year ended July 31. Last year, GAME Group, which largely sells console and handheld titles via physical retail, reported pre-tax profits of £10.8 million ($17 million) for the same period, a figure that has dropped into losses of £21.5 million ($34 million) this year. Group revenue for the period was down 9.6 percent year-on-year to £624.6 million while this morning the value of shares was down 11.79 percent to 58.00 pence (92.00 cents) per share. Peter Lewis, Chairman of GAME, said: "Against the backdrop of a very challenging marketplace and an uncertain economy, we have increased market share in all of our territories since January and maintained our leading position in Europe." Lewis argued that the figures reflect a return to the traditional annual ebb and flow of video game retail profits and losses. "As expected, we have returned to our traditional seasonal trading profile with losses reported in the first half and all profits being made in the second half," he said. "Whilst the Board remains mindful of the prevailing tough market conditions," he continued, "we believe that the Group is taking the right steps to position itself ahead of the next PC and video games cycle." He added: "We will continue our focus on operational efficiency, maintaining customer loyalty, and expanding our multi-channel proposition, while maximizing market share on key product launches. We believe that the profile of products launching in the second half should play well to the specialist retailer and our business is ready to maximize these opportunities." Nevertheless, the company's latest financial report reveals plans for more closures this year, reducing the number of stores from today's 635 to 550 in the UK by 2013. Earlier this year, the company closed 15 stores and 27 concessions. Speaking to financial news website Cantos.com [site requires registration], GAME Group CEO Ian Shepherd reinforced Lewis' assertion that the Group's performance reflects the wider market: "In the UK, the market is down 17 percent year-over-year. So the revenue drop of 9.6 percent implies we've done better than the market and, in fact, we've grown market share over this reporting period in every territory in which we operate." The group said that its online business was performing well, with revenue up two percent and that, despite the losses, it would be holding its interim dividend at 1.88 pence (2.97 cents) per share.

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