TIDMGMG
RNS Number : 4445I
Game Group PLC
15 June 2011
The GAME Group plc
Interim Management Statement
Strategy delivering results in a challenging market. Group well
positioned for new technology launches
The GAME Group plc ("GAME" or "the Group"), Europe's leading
retailer of pc and video games products, today issues its Interim
Management Statement covering the period from 1 February to 11 June
2011, ahead of its Annual General Meeting at 10am.
Ian Shepherd, Group CEO, commented:
"We are seeing early results from the strategic initiatives that
we outlined in February, even though the video games market has
been more challenging than anticipated this year. The pipeline of
new hardware and software which has been announced for 2012 and
beyond is encouraging, and our strategy is designed to strengthen
our leading position and drive growth as the market transitions and
evolves over the next five years.
Strategy Update
We still have a lot to do to deliver on our strategic ambitions,
but we have good momentum which is making an impact on our
performance in key business areas.
-- Multichannel: Our aim is to grow our market share
significantly by joining up our ecommerce and high street
operations. Our UK online market share is now 19%, up from 13% last
year. We will move our game.co.uk website onto a new platform this
summer.
-- Right stores: Our aim is to have a more efficient and
effective retail footprint. Our store closure programme is on
target, with 20 closures already(1) . We continue to review the
shape of each of our businesses, and expect to close further stores
this year. We are on track to deliver our planned 1% increase in
footfall conversion.
-- Unique product range: Our aim is to increase the range of
products that customers cannot buy elsewhere. A key element of this
is the sale of digital products, and UK digital sales have
accelerated to 33% year on year growth in the last 7 weeks. We will
continue to expand our digital range over the summer.
-- Novel ways to buy: Our aim is to increase customer
participation in our preowned and trade-in service, because it
offers them great value for money. Preowned remains 29% of total
sales at 41% margin (H1 2010: 27.5% sales at 38.5% margin). We are
developing new payment methods for our customers, which will be
announced in the coming months.
-- Strong customer relationships: Our aim is to have a direct
relationship with every customer. 300,000 new customers have joined
our loyalty schemes in the last 7 weeks, taking the total to 17.3
million. We will launch personalised campaigns to increase the
number of "super users" (our highest spending customers).
As previously noted we expect our total capital expenditure for
the year, which includes delivery of these initiatives, to be
around GBP18m (2010/11: GBP18m). This, combined with our working
capital profile, ensures we have a sound financial base with which
to implement our future plans.
Current Trading
PC and video games markets around the world continue to track
lower than last year. In the last 19 weeks the markets in which we
operate have shown revenue declines of 12.8%, with hardware down
10.3% and software down 14.1%. This is worse than the consensus
industry forecasts at the start of the year.
Although we continue to outperform, we are not immune to these
current market trends. For the 19 weeks to 11 June 2011, total
Group sales were down by 11.3% and like for like (lfl) Group sales
for the same period were down by 9.4%.
In the UK and Ireland, total store sales were down by 11.5% and
lfl sales were down by 9.1%. In our International business, total
store sales were down by 13.3% and lfl sales were down by 11.8%. In
our Online business sales were up by 2.4%.
This is an improving picture since our last announcement, and in
the last 7 weeks Group lfl has been -4.0%. This is in line with our
expectations, and reflects our success with the period's biggest
launch, LA Noire, and the other recent software releases.
E3 update
Last week's E3 conference(2) in Los Angeles showcased a range of
strong software franchises launching in the second half of this
year, including Modern Warfare 3, Battlefield 3, FIFA 12,
Assassin's Creed Revelations, Just Dance 3 and Mario Kart 3D, and
displayed details of new "fourth generation" technology which will
launch in the next 18 months: the PlayStation Vita handheld and the
Nintendo Wii U console.
Although impressive, we now believe that this year's software
releases are unlikely to improve the market materially in the short
term, given where we are in the hardware cycle.However, the
combination of a broader line-up of new software titles for the
3DS, the arrival of the PlayStation Vita and the launch of the
Nintendo Wii U bodes well for 2012 and the subsequent years.
As Europe's leading video games retailer with over 17 million
loyalty card holders and 3.5 million customers visiting our stores
and websites each week, we will be the principal retailer for all
of the launches in 2011 and beyond.
Outlook and guidance
Having evaluated the recent E3 announcements in the context of
overall market conditions, we now believe our Group revenues will
be 0% to -3% in 2011 compared to last year. This reflects
expectations that the total market will be down around -10% year on
year, compared to the previously anticipated revenue decline of
-5%. We retain our margin guidance of -100bps for the full year,
and expect that operating costs will be GBP5 - 8 million lower than
last year as we adapt our operations to fit the lower revenue
profile.
Our strong balance sheet and strict financial disciplines
continue to support our strategy. We have a list of clear actions
which will reinforce the strengths of our business and prepare us
for the forthcoming changes in our market, and are confident that
our strategy is positioning our business for growth in the long
term.
The Board
As previously announced, Peter Lewis will retire as Chairman
following today's AGM and Board meeting, and Chris Bell has been
appointed as the new Chairman. David Mansfield resigned as a Non
Executive Director on 13 May 2011. The process to recruit two new
Non Executive Directors is well progressed and we will announce
appointments in due course."
The Group will publish Interim Results on 27 September 2011.
- ENDS -
Notes:
1. Store portfolio:
11 June 2011 31 January 2011
Number Number
Company owned and concessions
UK and Ireland: 622 639
- GAME - stores 371 381
- GAME - concessions 10 11
- Gamestation 241 247
France 196 197
Iberia 291 287
Scandinavia 66 65
Czech Republic 30 31
Total Continental Europe 583 580
Australia 93 93
Total International 676 673
Total owned and concessions 1,298 1,312
Franchises
France - -
Iberia - -
Australia 1 1
Czech Republic - -
Total franchises 1 1
Total operational outlets 1,299 1,313
2. About E3:
E3 is the annual global video games industry trade show in Los
Angeles, at which a large range of new products are announced and
demonstrated. This year's event took place between 7 and 9
June.
Enquiries:
The GAME Group plc: +44 (0)1256 784566
Ian Shepherd, CEO
Ben White, Group Finance Director,
Simon Soffe, Investor Relations and Group Communications
Director
Brunswick: +44 (0)20 7404 5959
Jonathan Glass, Wendel Verbeek, Natalia Marisova
This information is provided by RNS
The company news service from the London Stock Exchange
END
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