Due to unexpected weakness in the video games retailing market, sector specialist Game Group has downgraded its revenues predictions for its full-year period, it was announced today.
Over the 41 weeks to November 12th 2011 its like-for-like (LFL) sales declined 8.6 per cent year-on-year, sliding 10.5 per cent in the UK & Ireland alone, although the company claims that this is ahead of its competitors.
In the year-to-date the overall video games market has seen trading fall a worrying 12.3 per cent, forcing Game to downgrade its expectations for the full 12 months from -3 per cent at worst to no better than -7 per cent.
Ian Shepherd, Game CEO, said: “The overall video games market remains very challenging, despite strong title launches, and our guidance today reflects the extraordinary economic times in which we are operating.”
Gross margins slumped 100 base points over the first 41-week period and the retailer‘s management now expect the margins to be down 150 base points for the full-year but operating costs should be £8 million to £10 million lower than last year.
A store closure programme is on target to cut 37 stores from Game‘s portfolio over the full 12-month period, with five UK & Ireland stores and six international outlets closed since July.
Christmas will be vital for the struggling retailer, with video games a key gift product category, but the movement of the wider market will worry investors and the firm‘s management about the feasibility of a successful turnaround.
Shepherd continued: “Game has outperformed the market, reinforcing our position as market leader, and I am hugely proud of our teams.
“They remain focussed on delivering our strategy, controlling costs and driving operational cashflow, and we remain well placed to benefit in the medium term both from the next console cycle and the growth in digital and social gaming.”