Entertainment retailer Game Group said today that its like-for-like (LFL) sales during the recent key Christmas trading period were down 12.9 per cent compared to the festive season in 2010.
In a statement released this morning, the video game specialist indicated that its UK & Ireland arm saw LFLs fall 15.2 per cent annually during the eight weeks to January 7th 2012, while during that time its international division reported a trading decline of 11.4 per cent.
Group LFLs for the 49 weeks to January 7th were down ten per cent, and full-year gross margins are now expected to be down by approximately 190 basis points.
Although currently remaining compliant with its loan covenants, Game noted today that there is an increased chance that it will not meet its EBITDA covenants (fixed charge coverage and leverage) when they are tested on February 27th.
It added however, that given its year-end cash position is set to be around the same as the previous year at £120 million, its debt service covenant should be met satisfactorily.
Ian Shepherd, Game Group CEO, said: “Our industry had an incredibly tough 2011, and so did we.
“We remain the market leader and have a clear strategy which will return the business to growth. We are adapting to the changing market and are well prepared for the next hardware cycle.”
The company is looking to its newly revamped multichannel operations for growth in the 12 months ahead and its online sales were up 3.9 per cent in the eight-week Christmas period and ahead by 1.3 per cent for the 49 weeks.
Matt Piner, Lead Consultant at market analysts Conlumino, said that today‘s results announcement from Game has some parallels with the Christmas trading statement released by entertainment specialist HMV Group on Monday.
“Game‘s results show no let up in its long running decline and, like HMV yesterday, cast a significant cloud over whether there is a market for selling entertainment products on the high street,” he explained.
HMV yesterday said that its LFL retail sales over the crucial five-week Christmas period were down 8.2 per cent year-on-year.