GAME Group agrees new financing terms, predicts £18m loss for year
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."
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.
the have offered trade in store credit of £38 if trade it in before 16/02/12 so will see if they honour it
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...
I think GAME have a lot they need to change, and face the fact that people don't want to pay £50 for CoD.
no wonder they are in trouble... they are expensive as hell
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)
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.