Game’s half-year profits have taken a serious hit thanks to nosediving declines in its core retail operations.
According to the gaming retailer’s interim results for the 26 weeks to January 27, profit before tax plummeted 25.5 per cent year-on-year from £16.5 million to £12.3 million.
This was driven by a steep 56.1 per cent drop in the profitability of its retail arm, plunging from £22.1 million to £9.7 million year-on-year.
Game said its core UK retail performance was adversely impacted by margin decline resulting from the change in its product offer, but added that this had been mitigated by £5 million saved in “further operational efficiencies”.
Game’s overall gross profit also declined 3.1 per cent year-on-year from £127.1 million to £123.1 million.
Despite the haemorrhaging profits, the retailer booked a 3.9 per cent uptick in revenue during the half-year period to £517.4 million.
Its gross transaction value for its events and esports division excluding digital also surged by 31 per cent to £7.1 million.
During the period, Game sold off its Multiplay Digital operation for £19 million and entered into an agreement with Sports Direct which saw the sporting goods retailer take a 50 per cent stake in the Game’s Belong business.
This will lead to the roll out of its gaming arenas to 100 locations over the next three years to drive profitability.
Game also used its interim update to announce that it had appointed Martin Hopcroft as interim chief financial officer with immediate effect.
Chief executive Martyn Gibbs said: “During the period important strategic progress was achieved, helping us to better position the group for our development in the rapidly growing esports market with our unique and high margin concept traded under the Belong banner.
“The traditional retail landscape is under increasing pressure and we have developed a strong growth strategy to utilise the valuable components of our core business in building our new experience based gaming offer.”
“We continue to negotiate property savings and, where appropriate, close stores, rationalise retail working hours and deliver further operational and procurement benefits as well as focus on our core retail opportunities including a large array of new software releases particularly during the final quarter of the 2018 calendar year.”