AGM Statement
July 03 2008 - 2:00AM
UK Regulatory
RNS Number : 2016Y
Game Group PLC
03 July 2008
3 July 2008
GAME GROUP PLC ("GAME")
ANNUAL GENERAL MEETING: TRADING UPDATE TO 28 JUNE 2008
Peter Lewis, the Chairman of GAME, Europe's leading specialist retailer of PC and video games products, has made the following statement
in advance of the Annual General Meeting at 10.00am today.
Trading Update
"The PC and video games market has continued to grow strongly in this period and I am pleased to report that GAME is performing slightly
ahead of our expectations for the first half of the year.
For the first 22 weeks to 28 June 2008, total Group sales were up by 54.0%. Like for like (lfl) Group sales (including Gamestation from
1 May 2008) for the same period were up by 24.8%.
In the UK and Ireland, total sales were up by 58.2% and lfl sales were up by 28.1%. In our International business, total sales and lfl
sales were up by 43.9% and 16.9% respectively. Our International business is performing strongly albeit the lfl performance is slightly
lower than the UK and Ireland primarily due to insufficient supply of Nintendo product particularly in Spain.
Gamestation
Gamestation continues to perform well and the Board is focussed on further strengthening the business through integration,
implementation of best practice and realising the synergies from the acquisition.
In line with previous guidance, we expect to generate cost and revenue synergies of around �7m in the current financial year which
implies an annual run rate for the 2009/10 financial year of around �10m. The non-recurring integration charge for the current year will be
between �4m and �5m. Furthermore, there will be capital expenditure of around �4m in the current year required to achieve our integration
plans.
The Board
We are delighted to welcome Dennis Woodside, 39, to our Board as a Non Executive Director. As Managing Director of Google in the UK,
Ireland and Benelux he has a wealth of experience of the internet and a deep involvement in online retailing. His earlier consultancy
experience with McKinsey and his legal training will also bring complementary skills to the Board.
Store Portfolio and Capital Expenditure
We will continue our expansion and grow our existing portfolio of 1,229 (Note 2) stores with up to 60 further new stores planned for the
Christmas trading period. The majority of the store openings will be in our International business.
As part of our International growth strategy we are continuing to buy-in or close existing franchises. To this end, we have today
completed the purchase of five of the remaining seven French franchise stores for a cost of EUR1.8m (�1.43m). These stores will now be
operated as part of our core business and gives us a total of 181 stores in France.
Our capital expenditure for the year, excluding acquisitions, is estimated to be around �42m.
First half profits and outlook
To date, the first half performance in all our markets is very good due to ongoing demand for all hardware formats and an increased
demand for software driven by an unusually strong release schedule including GTA IV, Wii Fit, Mario Kart and Metal Gear Solid 4.
The installed base of 3rd generation hardware continues to grow at an unprecedented rate and this is fuelling the sale of higher margin
software. As a result, and in line with previous guidance, we expect that as higher margin software increases within the overall sales mix
the Group gross margin for the year to 31 January 2009 will improve by 50 to 100 basis points (Note 1).
Because of the continuing positive trading performance and improved gross margin the Board now expects profit before tax and
non-recurring costs for the 6 months to 31 July 2008 to be not less than �33.0m (2007: �2.7m).
Whilst sales are driven mostly by demand for consoles and the quality of new software releases, we recognise the challenges of the wider
economic environment. In response, we will work hard on delivering competitive consumer offers and promoting the value associated with our
successful preowned offer.
We look forward to the second half of the year and, although the quality of the first half release schedule is unprecedented, we remain
confident about the key Christmas trading season."
- ends -
Notes
1. Group gross margin for the 6 months to 31 July 2007 was 25.8% and for the 12 months to 31 January 2008 was 24.8%
2. Store portfolio
28 June 2008 31 January 2008
Number Number
Company owned and concessions
UK and Ireland
- GAME - Stores 386 381
- GAME - Concessions 37 33
- Gamestation 245 235
668 649
France 181 170
Iberia 235 208
Scandinavia 62 62
Total Continental Europe 478 440
Australia 70 51
International 548 491
Total owned and concessions 1,216 1,140
Franchises
France 2 7
Iberia 9 10
Australia 2 4
Total franchises 13 21
Total operational outlets 1,229 1,161
Enquiries:
The GAME Group plc Lisa Morgan +44 (0)1256 784515
Group Chief Executive
David Thomas +44 (0)1256 784085
Deputy CEO & Group Finance Director
Simon Soffe +44 (0)1256 784162
Head of Investor Relations and Group
Communications
Brunswick Jonathan Glass +44 (0)20 7404 5959
Ash Spiegelberg
www.gamegroup.plc.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
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