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Retail

GAME Group agrees new financing terms, predicts 18m loss for year

Fri 03 Feb 2012 8:03am GMT / 3:03am EST / 12:03am PST
Retail

CEO Shepherd "under no illusions about the challenges in our market"

The GAME Group has been thrown a lifeline by its creditors in the City, which have renegotiated its lending terms to allow the company to continue to operate.

Announced in the early hours of this morning, the new deal will enable the chain to remain trading, with the executives confident that GAME will pass its covenant tests for the year ending January 31.

A projection of an $18 million loss for that year has been made, prior to the cost of tax and non-recurring items.

A statement from the Group to the City last night gave no concrete details of the new deal, but did indicate that credit lines had been extended.

"Further to the announcement earlier today, the Board of GAME is pleased to announce that it has now concluded discussions with its lending syndicate and agreed revised terms for its facilities.

"We're pleased to reach agreement with our lenders, but should be under no illusions about the challenges in our market or the hard work that is required to deliver our strategic plan."

Ian Shepherd, CEO, GAME Group

"Under the terms of the revised facilities, the Group has agreed to operate within lower limits of its existing facilities than was previously available. These revised facilities will allow the company to continue to trade. The Group has also agreed to provide an updated strategic plan for review, and approval in part, by the lenders. This plan will cover all aspects of the business's activities and strategy, including its overseas operations."

CEO Ian Shepherd made his own statement to accompany the release, expressing cautious optimism tempered by the need to remain realistic, saying: "We're pleased to reach agreement with our lenders, but should be under no illusions about the challenges in our market or the hard work that is required to deliver our strategic plan."

The rescue plan follows days of speculation over the future of the Group, following rumours of the loss of credit insurance, problems paying staff and stock difficulties. Whilst the stories about stock and payroll turned out to be false, GAME had confirmed that renegotiations with its credit syndicate were underway.

In the conference call accompanying its quarterly results yesterday, publisher EA seemed to make an oblique reference to GAME's financial difficulties when CEO John Riccitiello made reference to his company being "concerned with the financial condition of one of our major European retail partners, which could lead to both increased bad debt and lost sales."

11 Comments

Peter Dwyer Games Designer/Developer

482 293 0.6
Game have made themselves extremely unpopular with customers over the years. They charge high prices for new games while giving minimal trade in value. I remember buying Rage from them and a week later they offered just a few pounds (6 if I recall) for the trade in because it apparently wasn't a tripple A title.

Then have the nerve to charge only a few pounds less than full price for a COD second hand game!

Their days are numbered and the irony is I think it's only now that the games companies like EA and Activision have realised that without retail stores like Game their sales are effectively dead in the water. There will be no more 5 million plus day one sales for them.

Posted:2 years ago

#1

Steve Ball Software Engineer, Ubisoft Montreal

18 5 0.3
Their time is over...

Posted:2 years ago

#2

James Ferris buying assistant

4 0 0.0
just bought ff 13-2 wasnt surprised at the 42.99 price tag , will just have to buy new titles online now,
the have offered trade in store credit of 38 if trade it in before 16/02/12 so will see if they honour it

Posted:2 years ago

#3

Daniel Garraway Functionality Tester, SEGA Europe

4 0 0.0
1. Checking in-store prices is a hassle due to online prices not matching in-store ones, and having to call an 087 number to contact a store. Unless there's a store on the path of my journey there's little chance of me going in there.

2. Online prices are mediocre at best, I've only bought 1 item from there in the past few years, and I don't even remember what it was I bought prior to the last purchase.

3. Trade-in value is abysmal and I wouldn't even consider going there to sell something before going to CeX first.

The only reason for me to visit GAME currently is if I'm waiting somewhere nearby with nothing to do. They have their midnight releases, but other stores are doing those as well now, and there's always the chance you'll get it a day early if you order online anyway. I just don't have any reason to ever go there...

Posted:2 years ago

#4
Would it be fair to surmise that retailers have to pay for all their stock upon order (or are there tiered agreements for each vendor)

Posted:2 years ago

#5

Patrick Day-Childs Features Writer, Pixel Enemy

7 0 0.0
Before I managed to force companies to give me games for free when I was a nipper, GAME always had a "lawyer" feel to it, too sleek and new, felt like I was walking into a robot ran company.
I think GAME have a lot they need to change, and face the fact that people don't want to pay 50 for CoD.

Posted:2 years ago

#6

Peter Paninar Artist

35 3 0.1
FFXIII-2 bought in ASDA today for 32 ...the same game in GAME is 42
no wonder they are in trouble... they are expensive as hell

Posted:2 years ago

#7
@Patrick - why do you say people don't want to pay 50 for COD?

If that's the case why do they keep breaking sales records. Surely the issue for the industry is that its only COD that they will pay full price for because they play online.

Neither is the problem Game have. The problems are it's no different than any high-street store right now, the recession and the competition from on-line and big supermarkets.

Posted:2 years ago

#8
@ Peter - There are two issues from what I can tell.

1/ Supermarkets and online game specialist offer discounts below the RRP. Game (retail) invariably never offers any discounts (offsets the rental and overheads of retail perhaps?). In this regard, they take less of the profits overall. In addition, Europeans will say we brits have it really good, as discounts are almost unheard of 9ask the germans! :)

Apple - the cost of product is fixed whether it is online/retail such is the strong brand presence for any of its products. As such, they could sell you urine distilled as health water *, and we'd still buy it. Look at their new range of thunderport devices, you will find with frustration you need to buy any of their cables separately. The agony!!!

2/ High-Street problems: Retail bricks & mortar are all undergoing growth pains (not just in UK either), actually its a case of trying to break even vs the slightly rosier edge offered by online sellers (where there is reasonably reliable postal/goods services that places like Amazon can afford to bundle up a small goods in stupidly large boxes, such is the success) that either the rental for high street goes down or some sort of magical strategy is required.



*(there are homeopathic treatments using urine distilled as having health benefits, some say it involves ages old alchemical processes as well)

Posted:2 years ago

#9

Ray Kirkland Audio designer / Composer

12 0 0.0
Just to clear up a few things, Supermarkets can sell them cheaper because they don't deal in the same amount, all they want is to get you in the store to do your weekly shop, they can afford to make a loss on their games and other media, every call of duty launch we get people saying "well this shop had them on sale for 20 last night" once they have sold all 10 copies of the game they get in we have to explain for weeks that they do this to get you to prefer them to the other supermarkets they will never care about games.

CEX offer great trade prices but they sell them on for more than any other shop i have seen, last time i checked for example they gave more trade than most for a new game but sold it for more than other shops charge for new ones.

Posted:2 years ago

#10

Josef Brett Animator

296 0 0.0
I was in game today. They didn't have any new copies of Dark Souls, Forza 4 or Batman Arkham City (not old games) as well as other titles. In my 10 minutes in there I heard the sales staff tell 3 customers to buy games from Amazon or play. Not great for business...

Posted:2 years ago

#11

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