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Retail

GAME holiday sales drop 15%

Tue 10 Jan 2012 7:44am GMT / 2:44am EST / 11:44pm PST
Business

Retailer admits to "incredibly tough" year, looks to Vita, Wii U launches for recovery

High Street specialist GAME saw a sales drop of 14.7 per cent for the eight week Christmas period to January 7, with like-for-like sales down 12.9 per cent.

UK and Ireland store sales were down 17.6 per cent, international stores down 12 per cent and online sales up 3.9 per cent.

For the 49 weeks to January 2012 the group saw a sales decline of 11.9 per cent, just ahead of the overall UK market which was down 13.1 per cent.

"Our industry had an incredibly tough 2011, and so did we," admitted CEO Ian Shepherd.

"We remain the market leader and have a clear strategy which will return the business to growth. We are adapting to the changing market and are well prepared for the next hardware cycle." That strategy includes becoming the European market leader for sales of PS Vita and Wii U, both due this year.

The high cost of advertising and marketing has impact overall margins, said the company, which expects to be down for the full year by around 190 basis points.

The retailer has closed 39 stores this year, and is on track to have 550 UK stores by 2013.

Is also noted that it may not be able to meet its EBITDA loan covenants, although it remains in "constructive dialogue with its lenders, who remain supportive".

6 Comments

Matthew Hill
Head of Recruitment

75 26 0.3
An important question - why are Gamestop posting far better results than GAME despite broadly similar market challenges ?

I'm not claiming Gamestop are perfect (they still have lots to do) but surely there must be some valuable lessons here for UK retail ? One for Rob Fahey to apply the grey cells to perhaps !

Posted:2 years ago

#1

Darren Stewart
Videogame investor

52 17 0.3
Very simply because GAME is predominately UK and Gamestop predominately US. The UK market was down 13% year on year and while the numbers aren't in for the US until Thursday it looks like it will be down less than 5%.

Also, the UK has been subject to massive discounting on video games (thanks mainly to the supermarkets) which has driven down retailers margins (and has no doubt contributed to the fall off in the total market size).

Add it all up and that's why you have such a disparity between the fortunes of GAME and Gamestop.

http://www.bougafer.com - investing in the video game industry.

Posted:2 years ago

#2

Morville O'Driscoll
Blogger & Critic

1,535 1,333 0.9
Possibly also to do with distribution of gamers? Haven't seen exact figures in awhile, but UK/Europe is generally regarded as having more PC gamers than the US, so not only do Game suffer because they have a tiny PC section, but they lose sales to Steam/Origin anyway.

Posted:2 years ago

#3

Laura Haile
Studying BAHons Animation Production

3 0 0.0
When it's cheaper even for staff to buy online, how can they hope to compete with supermarkets on the same high street?

Posted:2 years ago

#4

Darren Stewart
Videogame investor

52 17 0.3
Well, GAME did compete with the supermarkets and actually gained market share. The problem is that they had to cut their margin to compete and that the whole video games market was massively down.

The big question is whether or not it is possible to have a successful business selling video games in the UK market. That is the real issue here.

http://www.bougafer.com - investing in the video game industry.


Posted:2 years ago

#5
A bit of a necro here, but one way to help improve Retail in Game and HMV is to make it just that extra bit special, such as the game shop displays in Japan

http://cache.kotaku.com/assets/images/9/...

Posted:2 years ago

#6

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