Entertainment retailer Game Group is now likely to meet the banking covenant tests later this month that it feared it would fail, after confirming renewed backing from its stakeholders and lenders late last night.
Full-year losses for the 12 months to January 31st 2012 are now expected by the retailer to reach £18 million and in order to continue trading it has agreed with its RBS-led lending syndicate to conduct an updated strategic review to assess the continuing viability of all parts of its business.
Revised terms for its facilities have been set with its lenders which will allow Game to operate within lower limits going forwards, with its annual rent bill for its portfolio of 1,274 stores worldwide thought to be in the region of £80 million.
Ian Shepherd, CEO of Game, commented: “We’re pleased to reach agreement with our lenders, but should be under no illusions about the challenges in our market or the hard work that is required to deliver our strategic plan.”
Yesterday the trader admitted that it was contemplating selling some or all of its 670 outlets based internationally, which collectively made a loss of £15.7 million over the last year according to reports, in order to reduce its debt burden.
Around this time last year Game announced a new strategy to combat weak trading which would focus on social and mobile gaming as well as growth in digital and online distribution, however this new focus has not delivered the expected results.
Sales have been consistently declining at the retailer for well over a year, with the 12.9 per cent slump in Christmas trading blamed on weak consumer spending and a lack of new products entering the market.
Almost 40 of the retailer’s stores have closed in the last 12 months and more now seem set to follow as a result of this latest review.