GAME blames Nintendo for 19% revenue drop
UK retailer's sales fall, but optimistic about E3 and new CEO
UK-based retailer the GAME Group has seen hardware revenues drop by 33 per cent and software by 11 per cent in the first 19 weeks of the company's financial year, with an overall decrease of 19 per cent year-on-year.
The results from the interim management statement cover the period from February 1 to June 12 and show total group sales down by 11.4 percent and like-for-like sales down 12.3 per cent. The hardware sales drop in particular was blamed primarily on lower Nintendo sales.
In the UK and Ireland total sales dropped by 18.5 per cent, and like-for-like sales by 17.2 per cent. International sales for the company were up by 1.2 per cent and like-for-like sales down 4.6 percent.
Finally, online sales (which now account for 17.6 per cent of total sales in the UK) increased by 13.5 per cent and, excluding the launch of the DSi in the same period last year, group like-for-like sales were down 8.4 per cent.
Despite these falls the company continued to outperform the market. GAME attributed this to exclusive extra content promotions for top-selling games such as Red Dead Redemption and Battlefield: Bad Company 2, as well as unique hardware bundles, deals of the week, and its well established trade-in and pre-owned programme.
As a result, the company is now predicting full year gross margins to decrease only by around 100 basis points year-on-year. GAME also mentioned the current E3 2010 trade show in its statement, with the company indicating that the new hardware releases were not likely to impact its results until the next financial year. Full year results are thus still expected to decrease overall.
At the same time, the company has announced the appointment of Ian Shepherd as its new CEO, effective from June 28. From that point on, current interim CEO Chris Bell will resume his role as senior non-executive director. For the last four years Shepherd has been UK consumer director at Vodafone, and claims to currently be "obsessed" with Modern Warfare 2.
"I am delighted that Ian has accepted the role of chief executive. He is a young, dynamic CEO with very strong consumer expertise and good knowledge of the PC and video games market," said chairman Peter Lewis.
"The strength of our business lies with our brands, customer relationship management, and supplier partnerships. Ian has a proven track record in each of these areas. The board is confident that he has the talent and energy to develop our customer proposition further and to drive the business forward," he added.