Game profits drop 69% despite e-sports boost

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Game

Game has posted revenue and profit losses for the full year as it continued to struggle with “structural headwinds” and the transformation of its core business.

In the 52 weeks to July 29 the video game retailer saw a 3.6 per cent decline in revenues to £782.9 million compared to 2016.

Group gross transaction values also fell 2.4 per cent despite a 6.6 per cent boost in the second half of the year.

Profits fared no better with group gross profit dropping 5.7 per cent to £205.1 million, alongside a massive 68.75 per cent drop in group adjusted EBITDA dropping from £25.6 million to just £8 million.

Statutory pre-tax losses stood at £10 million, plummeting from pre-tax profits of £1.1 million in 2016.

UK retail performance largely offset 22.5 per cent adjusted EBITDA growth in Game’s other key market Spain, attributing particularly difficult market conditions in the first half of the year and a weaker line up of big game launches.

This contributed to a 51 per cent decline in its core retail EBITDA to £14 million.

Throughout the year the retailer has pushed to “transition our business from a leading retailer of boxed products to a leading provider of physical and digital gaming products, services and experiences.”

Game now boasts 18 “Belong” in-store gaming arenas, and aims to have 35 by the end of next year.

Although the sector saw a £6 million loss for the retailer in the year, this largely reflected investments made during the period aimed at supporting future growth.

The group’s e-sports drive has produced “encouraging early performance” seeing events, esports and digital growth up 116.4 per cent to £13.2 million.

“We have now opened 18 Belong venues, and we have seen encouraging early performance,” chief executive Martyn Gibbs said.

“We have reviewed our operations and are now accelerating development plans as we seek to fully capitalise on the strong growth potential in the growing esports market.

“After two years of declines, our core UK console market returned to growth in the second half of our financial year on the back of the launch of the Nintendo Switch. This growth has continued into our new financial year in both of our key territories.

“Whilst we remain mindful of the structural headwinds that remain in our core markets, we expect recent positive market dynamics to continue into our peak Christmas trading period, driven by strong growth in all elements of the PlayStation 4 category, continued customer demand for the Nintendo Switch, the launch of Microsoft’s Xbox One X and continued stronger demand for related software.

“Against this market backdrop, our priorities remain unchanged. Across the group we are focused on maximising the opportunities from our core retail markets by delivering a compelling and constantly improving customer proposition, realising further operational efficiencies and driving the continued transformation of the business, as we transition our business from a leading retailer of boxed products to a leading provider of physical and digital gaming products, services and experiences.”

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