PC and video games products retailer Game Group has today announced a worrying operating loss for its first half period of £48 million and a loss before tax of £51.5 million.
Total sales in the 26 weeks to July 31st 2011 dropped 10.5 per cent year-on-year whilst like-for-like trading fell 9.9 per cent compared to the same period in 2010.
Game CEO Ian Shepherd blamed “a combination of a cyclical low point in the industry itself and unprecedented macro-economic conditions” for the dramatic decline in revenues.
With very few major software releases in the year to date, demand has been correspondingly stifled but with gross margins falling 170 basis points due to promotional activity things have been even tougher for the company.
The upcoming Christmas period, which represents around 40 per cent of Game’s annual revenues, is looking increasingly important for the struggling trader, particularly with sales getting worse since the end of the first half. In the 36 weeks to September 24th 2011 total trading was down 11.4 per cent year-on-year.
Shepherd said: “Game Group has increased market share in this difficult climate as we have focussed on delivering our strategy. Nonetheless, the impact of the wider market can be seen on our first half results.
“Like many other retailers, we believe that trading conditions will remain tough for the remainder of the year, and have set our plans accordingly.
“We are determined to again outperform a difficult market this Christmas, by using our unique specialist position to give customers the very best choice and value.”
A number of initiatives have been recently launched by the retailer to try and transform itself into a modern multichannel trader, with the launch of an online sales platform and strategic partnerships with Sony, Microsoft and streaming service OnLive.
It has also reduced its store numbers by 51 over the last year to 1,287 worldwide but net debt for the business has grown to £91 million from £63.5 million during that time.