GAME reports sales up 6.3 per cent for first half

Europe's leading videogame retail chain, GAME Group plc, has issued a trading update for the first 22 weeks of the year - revealing that the firm managed to achieve 6.3 per cent overall sales growth despite tough market conditions.

However, the growth was driven almost entirely by expansion in continental Europe - the group saw like for like sales drop by 2.6 per cent during the period, while considering the UK and Ireland alone, like for like sales were down 5.4 per cent.

The reduction in like for like sales value was accompanied by lower gross margins, with the company noting a higher proportion of low margin hardware sales and an ongoing deflation in software prices, which it says is normal at this point in the console cycle.

"The successful launch of the Nintendo DS in March mitigated an otherwise tough retail environment," commented GAME chairman Peter Lewis. "Trading conditions continue to be challenging with ongoing price deflation and a continued lack of strong software releases."

Looking forward, Lewis said that GAME expects an uplift for the group from the launch of the PSP in Europe this September, while the Europe-wide store opening programme is on track to meet its target of 80 new stores this year - bringing the total number of GAME stores across the region to over 700 by Christmas.

The launch of Xbox 360, however, doesn't seem to be a major factor in GAME's plans for the rest of the year, with Microsoft's new console being noted alongside the PlayStation 3 as a system which is expected to make a significant impact in 2006 and beyond.

GAME's expansion in Europe is perhaps even more crucial now than it was in the past, with a significant threat to the group's dominance in this region now coming from US firms GameStop and Electronics Boutique - which recently merged to form the world's largest videogame retail chain, and has stated that its sights are now set on Europe as a key growth territory.